Canadians who earn income from the online economy are required to report all such income earned on their annual tax returns. To assist the tax authorities in the enforcement of those reporting obligat...
The federal government has announced the Canada Pension Plan contribution percentages and amounts which will be in effect during 2025. Maximum pensionable earnings for 2025 will be $71,300, and the ba...
The Canada Revenue Agency (CRA) provides a comprehensive guide to the federal tax rules relevant to post-secondary students during the current taxation year. That guide, P105 – Students and Income T...
In its budget for the 2024-25 year, the federal government announced that a new Canada Carbon Rebate (CCR) would be provided for small businesses. In order to receive the CCR, a business must be a Can...
The federal government has announced the Employment Insurance (EI) premium rates which will be payable by employees and employers during the 2025 calendar year. For 2025, those rates are set at $1.64 ...
In its regularly scheduled interest rate announcement made on October 23, the Bank of Canada announced that the Bank Rate would be lowered by one-half percentage point, from 4.5% to 4.0%. In the press...
The October release of the federal Labour Force Survey shows a slight reduction in the overall rate of unemployment recorded for September 2024, as compared to the previous month. That rate declined b...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation fell to 1.6% for the month of September 2024. As noted in the StatsCan release, that rate...
Millions of Canadians earn income by selling goods or services through websites or apps, and the revenue from such sales represents income to those vendors, which they are required to report on their ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Canadian businesses which have sales of taxable goods or services in excess of $30,000 must register for GST/HST purposes and are required to file returns and remit GST/HST amounts on a prescribed sch...
The Bank of Canada has provided the dates on which it will make scheduled interest rate announcements during the 2025 calendar year. Those dates are as follows. Wednesday, January 29, Wednesday, Marc...
Benefit amounts provided under the federal Old Age Security (OAS) program are indexed to inflation and adjusted at the beginning of each quarter of the calendar year. The federal government has announ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Consumer Price Index (CPI) shows that the overall rate of inflation for the month of August 2024, as measured on a year-over-year basis, stood at 2.0% ...
Finance Canada has announced that, effective as of December 15, 2024, all first-time home buyers and all buyers of new-build residential properties will qualify for 30-year amortization periods (the t...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight increase in the overall unemployment rate for the month of August. That rate rose to 6.6%, as compared to the 6.4% r...
The third individual income tax instalment payment for the 2024 tax year is due and payable on or before September 15, 2024. As September 15 falls on a Sunday this year, tax instalments due will be co...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for 2024, as well as the rates that will apply for the purpose of calculating emp...
In its regularly scheduled interest rate announcement made on September 4, the Bank of Canada reduced interest rates by 0.25%, meaning that the Bank Rate is now 4.5%. In its press release announcing t...
The federal government provides a non-refundable tax credit for volunteer firefighters and search and rescue volunteers who perform at least 200 hours of combined volunteer service during the year. Th...
The federal, provincial, and territorial governments provide a number of child and family tax credit and benefit programs, and the current benefit year for such programs began on July 1, 2024. In most...
Individuals who pay income tax by instalments must make the third such instalment payment for the 2024 tax year on or before September 15th, 2024. As that date falls on a Sunday this year, such paymen...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation (as measured on a year-over-year basis) stood at 2.5% for the month of July - the lowest ...
The most recent release of Statistics Canada’s Labour Force Survey shows no change in the overall unemployment rate for the month of July 2024. That rate stood at 6.4%, the same rate recorded for Ju...
In this year’s budget, the federal government announced that the inclusion rate for all capital gains earned by corporations after June 24, 2024 would increase from 50% to 66.6%. At the same time, t...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The federal and provincial governments offer a range of tax credit and benefit programs which provide tax-free payments to eligible Canadians. The current benefit year for such credit and benefit prog...
Home purchasers who take out a mortgage must pay back that mortgage amount (plus interest) over a specified period of time, known as the amortization period. While the standard amortization period is ...
The federal and provincial governments offer a number of tax credits and benefits for which both eligibility and the amount receivable are determined, in part, by the income of the recipient. In order...
The Canada Revenue Agency (CRA) administers a program – the Taxpayer Relief Program – under which interest and penalty charges can be waived where taxpayers are unable to meet their tax filing or ...
In its regularly scheduled interest rate announcement made on July 24, the Bank of Canada announced that rates would be lowered by 25 basis points. As a result, the Bank Rate now stands at 4.75%. In t...
The Canada Revenue Agency has issued a News Release reminding taxpayers and mental health service providers that mental health services are now generally (except in the province of Québec) exempt fro...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation declined slightly during the month of June 2024. That rate stood at 2.7%, as compared to ...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight increase in the overall rate of unemployment during the month of June 2024. That rate stood at 6.4%, as compared to ...
In this year’s budget, the federal government announced that the Canada Carbon Rebate program would be expanded to be available to small businesses. In order to be eligible for the rebate a small bu...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation during the month of May 2024 stood at 2.9% – an increase from the 2.7% inflation figure...
The federal and provincial governments provide eligible taxpayers with a range of refundable tax credit and benefit amounts. Such benefits are generally paid on a monthly or quarterly basis and are re...
The Old Age Security (OAS) benefit paid to Canadian residents aged 65 and older is indexed quarterly to changes in the Consumer Price Index. The federal government recently announced that, for the thi...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
As announced in the 2024-25 federal budget, the percentage of capital gains included in income will increase from 50% to 66.6%, effective for gains realized after June 24, 2024. The change in the incl...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate for the month of May increased slightly, to 6.2%. The comparable rate for April 2024 was 6.1%. Acr...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first three quarters of 2024, as well as the rates that will apply for th...
All self-employed taxpayers, and their spouses, are required to file an individual income tax return for the 2023 tax year on or before Monday June 17, 2024. All taxpayers (including those who are sel...
In its regularly scheduled interest rate announcement made on June 5, the Bank of Canada announced that rates would be lowered by 25 basis points. As a result, the Bank Rate now stands at 5.0%. The ch...
In its 2024-25 budget, the federal government announced the creation of the Canada Carbon Rebate for Small Businesses, which will be provided to eligible Canadian-controlled private corporations which...
The second individual income tax instalment payment for the 2024 tax year is due and payable on or before Monday June 17, 2024. Taxpayers who are subject to the instalment payment requirement will hav...
The Canada Revenue Agency’s digital services make it possible for Canadian taxpayers to manage all of their personal tax filing, payment, and appeal rights and obligations online, on the Agency’s ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation declined slightly during the month of April. For that month, the inflation rate stood at ...
The Canada Revenue Agency has issued a notice indicating that applications for the GST/HST rebate for new purpose-built rental housing (PBRH) can be made online, on the CRA website, as of May 13, 2024...
The most recent release of Statistics Canada’s Labour Force Survey shows that, while employment during the month of April increased by 90,000, the overall unemployment rate was unchanged from March,...
Self-employed taxpayers (and their spouses) are required to file an individual income tax return for the 2023 tax year on or before June 17, 2024. The Canada Revenue Agency (CRA) recently updated and ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
All Canadian individual taxpayers were required to pay any balance of income tax owed for the 2023 tax year on or before April 30, 2024. While self-employed taxpayers and their spouses have until June...
The 2024-25 federal budget included a measure to increase the percentage of capital gains which must be included in income by corporations and trusts and, in some circumstances, individual taxpayers. ...
Most Canadian individual taxpayers are required to file their income tax return for the 2023 tax year on or before Tuesday April 30, 2024. The exception is self-employed taxpayers (and their spouses) ...
All Canadian individual taxpayers who have tax amounts owing for the 2023 tax year must pay those amounts in full on or before Tuesday April 30, 2024. Where amounts owed are not paid in full by that d...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation rose from 2.8% in February 2024 to 2.9% in March 2024. Both rates are as measured on a ye...
The federal home buyers' plan (HBP) allows eligible first-time home buyers to withdraw up to $35,000 from a registered retirement savings plan (RRSP) to purchase or build a first home. No tax is payab...
Budget 2024 proposes to repeal the exception to the debt forgiveness rules for bankrupt corporations and the loss restriction rule applicable to bankrupt corporations. This change would subject bankru...
Budget 2024 proposes to remove the tax-indifferent investor exception (including the exchange traded exception) to the anti-avoidance rule. This measure would simplify the anti-avoidance rule and prev...
Budget 2024 proposes amendments to the Income Tax Act to preclude a corporation from qualifying as a mutual fund corporation where it is controlled by or for the benefit of a corporate group (includ...
Budget 2024 proposes to introduce a supplementary rule to strengthen the tax debt anti-avoidance rule, applicable in the following circumstances: there has been a transfer of property from a tax debt...
Legislative proposals to implement the excessive interest and financing expenses limitation (EIFEL) rules are currently before Parliament in Bill C-59. The EIFEL rules provide an exemption for interes...
Budget 2024 proposes to return a portion of fuel charge proceeds from a province via the new Canada Carbon Rebate for Small Businesses, an automatic, refundable tax credit directly for eligible busine...
Budget 2024 proposes to provide immediate expensing for new additions of property in respect of Class 44 (patents or the rights to use patented information for a limited or unlimited period), Class 46...
Budget 2024 proposes to provide an accelerated CCA of 10% for new eligible purpose-built rental projects that begin construction on or after Budget Day and before January 1, 2031, and are available fo...
Budget 2024 proposes adjustments to the Clean Technology Manufacturing investment tax credit to provide greater support to businesses engaged in the production of qualifying materials at polymetallic ...
Budget 2024 provides the design and implementation details of the Clean Electricity investment tax credit announced in Budget 2023. Eligible corporations would be: taxable Canadian corporations; prov...
Budget 2024 proposes to increase the home buyers' plan (“HBP”) withdrawal limit from $35,000 to $60,000. This increase would also apply to withdrawals made for the benefit of a disabled individual...
Budget 2024 proposes to extend the period for which qualifying foreign charities are registered as a qualified donee from 24 months to 36 months. In addition, foreign charities would be required to su...
Budget 2023 proposed tax rules to facilitate the creation of employee ownership trusts (“EOTs”). These legislative proposals are currently before Parliament in Bill C-59. The 2023 Fall Economic St...
Budget 2024 proposes to expand the list of expenses recognized under the Disability Supports Deduction, subject to the specified conditions, such as the cost of: an ergonomic work chair (including an...
Budget 2024 proposes to amend the Income Tax Act to extend eligibility for the Canada Child Benefit (“CCB”) in respect of a child for six months after the child's death (the "extended period"), if...
Budget 2023 announced amendments to the Income Tax Act that would change the Alternative Minimum Tax (“AMT”) calculation. Draft legislative proposals to implement these changes were published for ...
Budget 2024 proposes to double the credit amount for the Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit from $3,000 to $6,000, applicable to the 2024 and subsequent ...
Budget 2024 proposes to increase the capital gains inclusion rate from one half to two thirds for corporations and trusts, and from one half to two thirds on the portion of capital gains realized in t...
Budget 2024 proposes to introduce the Canadian Entrepreneurs' Incentive, which would reduce the tax rate on capital gains on the disposition of qualifying shares by an eligible individual. Specificall...
The amount of the Lifetime Capital Gains Exemption (“LCGE”) is $1,016,836 in 2024 and indexed to inflation. Budget 2024 proposes to increase the LCGE to apply to up to $1.25 million of eligible ca...
In its regularly scheduled interest rate announcement made on April 10, the Bank of Canada indicated that, in its view, no change was required to current interest rates. Accordingly, the Bank Rate rem...
The most recent release of Statistics Canada’s Labour Force Survey shows a small increase in the rate of unemployment during the month of March. That rate increased by 0.3%, to 6.1%. Among demograph...
The federal government provides investors in flow-through shares of qualifying mineral exploration companies with a non-refundable 15% tax credit. That mineral exploration tax credit program was sched...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Increases to benefits payable under the Old Age Security program are based on changes to the Consumer Price Index, with such benefit amounts indexed quarterly. The federal government has announced tha...
Post-secondary students are entitled to claim a number of tax deductions and credits for costs relating to their education. In addition, such students are frequently in a position to claim several tax...
The most recent release of Statistics Canada’s Consumer Price Index shows a slight decline in the overall inflation rate for the month of February 2024. That rate stood at 2.8%, a 0.1% decline from ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2024, as well as the rates that will apply for the purpose ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight increase in the overall rate of unemployment during the month of February. That rate rose to 5.8%, as compared to th...
Finance Canada has announced that the federal budget for the upcoming (2024-25) fiscal year will be brought down on Tuesday April 16, 2024, at around 4 p.m. Once the budget measures are announced, the...
In its regularly scheduled interest rate announcement made on March 6, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remains at 5.25...
The Canada Revenue Agency has published the income threshold which will apply for purposes of the Old Age Security (OAS) clawback threshold during 2024. Individuals who receive OAS benefits can have u...
Canadian businesses which have registered for goods and services tax/harmonized sales tax (GST/HST) purposes must file returns with the federal government on a prescribed schedule, which can be monthl...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation declined to below 3% during the month of January 2024. The inflation rate for that month (as meas...
The Canada Revenue Agency has announced that its digital services for the filing of individual income tax returns for the 2023 tax year are now open. Both NETFILE and ReFILE services are available 21...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight drop in the overall rate of unemployment for the month of January 2024. That rate declined by 0.1%, from 5.8% to 5.7...
The Canada Revenue Agency (CRA) has announced that the filing deadline for individual income tax returns for the 2023 tax year will be Tuesday April 30, 2024. Self-employed individuals and their spous...
The Canada Revenue Agency has announced that the deadline for making registered retirement savings plan (RRSP) contributions which can be deducted on the return for the 2023 tax year will be Thursday ...
While the majority of Canadian taxpayers file their income tax returns by electronic means, paper returns can still be filed with and processed by the Canada Revenue Agency (CRA). The Agency will be s...
The Canada Revenue Agency has announced that its services for the online filing of individual income tax returns for the 2023 tax year will be available in mid-February. Both NETFILE and ReFILE servic...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In its regularly scheduled interest rate announcement made on January 24, 2024, the Bank of Canada indicated that, in its view, no change to current rates was needed. Accordingly, the Bank Rate remain...
Canadian taxpayers can still file individual income tax returns for the 2017 to 2022 tax years using the Canada Revenue Agency’s online tax filing service NETFILE. The NETFILE filing service provide...
The most recent release of Statistics Canada’s Consumer Price Index shows an increase in the overall rate of inflation for the month of December 2023. That rate stood at 3.4%, as compared to the 3.1...
During the pandemic, the federal government provided loan financing to eligible Canadian businesses through the Canada Emergency Business Assistance (CEBA) program. Such loan amounts provided are part...
The most recent release of Statistics Canada’s Labour Force Survey shows no change in the overall unemployment rate for the month of December 2023. That rate stood at 5.8%, the same as the rate reco...
The most recent release of Statistics Canada’s Consumer Price Index shows no change in the overall rate of inflation for the month of November 2023. That rate stood at 3.1%, the same rate recorded f...
Benefits paid under the Canada Pension Plan are indexed annually, based on changes to the Consumer Price Index. The federal government has announced that CPP benefits paid during the 2024 calendar yea...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first quarter of 2024, as well as the rates that will apply for the purpo...
Employment and Social Development Canada (ESDC) has announced that Old Age Security (OAS) payments for the first quarter (January to March) of 2024 will increase by 0.8%. OAS benefit amounts are adjus...
Individual taxpayers who pay income tax for the year through instalment payments do so by four prescribed deadlines each year. The fourth and final instalment payment for the 2023 tax year must be mad...
The most recent release of Statistics Canada’s Labour Force Survey shows little change in the general unemployment rate for the month of November 2023. For that month, unemployment stood at 5.8%, as...
In its regularly scheduled interest rate announcement made on December 6, 2023, the Bank of Canada indicated that, in its view, no change to current rates was needed. Accordingly, the Bank Rate remain...
The Canada Revenue Agency has issued a Tax Tip reminding employers and pension plan administrators of a change in T4 and T4A reporting rules, beginning with the 2023 tax year. All issuers of T4s and T...
Annual changes in personal income tax brackets and tax credit amounts are based on changes in the Consumer Price Index. The Canada Revenue Agency has announced that, for the upcoming 2024 tax year, su...
The 2023-24 Fall Economic Statement brought down by the Minister of Finance on November 21 indicates that the federal government will run a deficit of $40 billion for the current (2023-24) fiscal year...
The most recent release of Statistics Canada’s Consumer Price Index shows a drop in the overall inflation rate for the month of October, with the inflation rate for that month coming in at 3.1%, as ...
The federal government levies a 1% underused housing tax (“UHT”) on some owners of vacant or underused residential properties in Canada. Generally, affected property owners are foreign nationals, ...
Finance Canada has announced that the Fall Economic Statement for the 2023-24 fiscal year will be presented by the Minister of Finance on Tuesday November 21, 2023 at around 4 p.m. Once the measures i...
The most recent release of Statistics Canada’s Labour Force Survey shows little change in the unemployment rate recorded for the month of October 2023. That rate rose by 0.2%, from 5.5% to 5.7%, wit...
The Canada Revenue Agency (CRA) has announced the contribution percentages, limits, and amounts which will apply for purposes of the Canada Pension Plan (CPP) during 2024. Those figures include change...
Residents of Ontario, Nova Scotia, New Brunswick, Manitoba, Prince Edward Island, Saskatchewan, Alberta, and Newfoundland and Labrador receive a Climate Action Incentive Payment (CAIP) from the federa...
The federal government has announced that sales of home heating oil delivered between November 9, 2023 and April 1, 2027 will be exempt from the federal carbon tax. In the same announcement, the feder...
Canadians who hold “crypto-assets”, including cryptocurrency, are required to report any income or capital gains resulting from transactions involving such assets. The Canada Revenue Agency recent...
In its regularly scheduled interest rate announcement made on October 25, the Bank of Canada indicated that, in its view, no change to current interest rates was required. The Bank Rate accordingly re...
EFILE services for the filing of individual income tax returns for the 2023 tax year will be available sometime in early 2024. The Canada Revenue Agency recently issued a program update reminding EFIL...
The most recent release of Statistics Canada’s Consumer Price Index shows a drop in the overall rate of inflation for the month of September. That rate stood at 3.8%, as compared to the 4.0% inflati...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Labour Force Survey shows no change in the overall unemployment rate recorded for the month of September, with that rate remaining at 5.5% for the thir...
The Canada Employment Insurance Commission has announced the premium rates and limits which will apply for purposes of the Employment Insurance program during the 2024 calendar year. For 2024, as a re...
The federal government has announced that amounts paid under the Old Age Security (OAS) program will increase for the fourth quarter (October to December) of 2023. The increases are based on changes t...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of August stood at 4.0%, as compared to the 3.3% inflation rate recorded fo...
The Canada Revenue Agency has issued a Tax Tip indicating that interest and penalty relief will be provided to taxpayers who are unable to meet their tax filing and/or payment obligations due to this ...
During the pandemic, the federal government provided the small business sector with financial assistance through the Canada Emergency Business Account (CEBA) program. That program provided eligible sm...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the last quarter of 2023, as well as the rates that will apply for the purpos...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of August stood at 5.5%, the same rate recorded for the month of July. As no...
Individual Canadian taxpayers who pay federal income tax by instalments make those instalment payments of tax four times each year, by specified deadlines. The third income tax instalment deadline for...
In its regularly scheduled interest rate announcement made on September 6, the Bank of Canada indicated that, in its view, no change was needed to current interest rates. Accordingly, the Bank Rate re...
During the pandemic a number of post-secondary students received the Canada Emergency Response Benefit (CERB) and, in some cases, have been asked to repay those benefits to the federal government. The...
Canadian parents can save for their children’s post-secondary education on a tax-assisted basis, through the federal Registered Education Savings Plan (RESP) program, which allows parents to contrib...
Beginning in 2023, Canadians are able to save for the purchase of a first home on a tax-assisted basis through the new First Home Savings Account (FHSA) program. One of the features of the FHSA progra...
For several years, businesses which file more than 50 information returns (slips and summaries) have been required to file those returns by electronic means, rather than paper filing. Effective as of ...
Beginning in 2023, Canadians aged 18 and over can save for the purchase of a first home on a tax-assisted basis, through the First Home Savings Account (FHSA) program. Contributions (to a maximum of $...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall inflation rate increased by .5% for the month of July. That rate reached 3.3%, as compared to the 2.8% infl...
The federal government provides a refundable tax credit to lower and middle-income Canadians, to help offset the impact of the goods and services tax/harmonized sales tax (GST/HST). That credit is p...
The most recent release of Statistics Canada’s Labour Force Survey shows little change in overall unemployment rate for the month of July 2023. That rate increased by 0.1% to 5.5%. Across demographi...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Bank of Canada issues interest rate announcements on eight scheduled dates throughout the year, and the Bank recently released its schedule for such announcements during 2024. Interest rate announ...
Through its Canada Child Benefit program, the federal government provides a non-taxable monthly benefit to parents of children under the age of 18. Benefit amounts are adjusted at the start of each be...
During the pandemic, relieving changes were made to the policies and practices of the Canada Revenue Agency (CRA) with respect to the collection of tax amounts owed by Canadians. In the past several m...
The Canada Revenue Agency has issued a reminder to Canadian taxpayers that applications for the second benefit period for the Canada Dental Benefit can be made as of July 1, 2023. Eligible families ca...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of June 2023 (as measured on a year-over-year basis) stood at 2.8%. The com...
The federal government has announced that maximum payments under the Old Age Security program will increase for the July to September 2023 benefit period. Effective with the July 2023 payment, the max...
In its regularly scheduled interest rate announcement made on July 10, the Bank of Canada indicated that, in its view, another increase to interest was warranted. Consequently, the Bank Rate now stand...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Workers’ Benefit (CWB) is a refundable tax credit provided to lower-income individuals and families which have working income from employment or self-employment. In previous years, the CW...
The Canada Revenue Agency has issued a reminder to Canadians of the availability of administrative relief from tax interest and penalty charges for taxpayers who have been affected by this spring’s ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for May 2023 stood at 3.4%, as measured on a year-over-year basis. The comparable rate fo...
Qualifying Canadians are entitled to claim a disability tax credit which reduces both federal and provincial tax payable. In order to claim that credit an individual must complete and submit an applic...
The federal government has released additional details of the “grocery rebate” which was announced in the 2023 federal Budget. That rebate is scheduled to be paid to eligible Canadians on July 5, ...
The most recent release of Statistics Canada’s Labour Force Survey shows that unemployment rose slightly during May 2023, the first such increase since August of 2022. During May, the unemployment r...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first three quarters of 2023, as well as the rates that will apply for th...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In its regularly scheduled interest rate announcement made on June 7, the Bank of Canada indicated that interest rates would be increased by one-quarter percentage point, bringing the Bank Rate to 5%....
Canadians who pay income tax by instalment make those instalment payments of tax four times each year, by specified deadlines. The second income tax instalment deadline for the 2023 tax year falls on ...
While most Canadian taxpayers were required to file their income tax returns for the 2022 tax year on or before May 1, 2023, self-employed taxpayers (and their spouses) have until Thursday June 15, 20...
The federal (and provincial) governments provide taxpayers with a number of tax credits and benefits which are delivered through monthly or quarterly direct payments. In many cases, eligibility for su...
In its 2023-24 budget, the federal government announced that, to assist Canadians coping with recent inflationary increases in the cost of food, it would be providing a one-time “grocery rebate”. ...
All Canadian individual taxpayers were required to pay any tax balance owed for the 2022 tax year on or before May 1, 2023. As of May 2, 2023, interest at a rate of 9% is levied on all such outstandin...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation increased slightly during the month of April, to 4.4%. The comparable rate for March 2023...
Most Canadians were required to file an income tax return for the 2022 tax year by the end of April 2023. For each such filing, a Notice of Assessment is issued by the Canada Revenue Agency (CRA), out...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Canadians who receive Old Age Security (OAS) benefits and whose net income is above a specified threshold (currently $86,912) must repay a portion of those benefits, through the OAS recovery tax (or c...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Most individual Canadian taxpayers must file their income tax returns for the 2022 tax year on or before Monday, May 1, 2023. Self-employed individuals and their spouses, however, have until June 15, ...
Monday May 1, 2023 is the deadline by which all individual income taxes owed for the 2022 tax year must be paid. The May 1 payment deadline applies regardless of the date by which an individual must f...
In the 2023-24 budget, the federal government announced that a one-time payment would be made to Canadians to help them meet inflationary increases in the cost of living. That payment – the “groce...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall inflation rate for the month of March 2023 stood at 4.3%, as compared to the 5.2% rate recorded for Februar...
In its scheduled interest rate announcement made on April 12, the Bank of Canada indicated that, in its view, no change to current interest rates was needed. Accordingly, the Bank Rate remains at 4.75...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of March 2023 stood at 5.0%, the same rate recorded for the previous month. ...
Old Age Security (OAS) benefits paid monthly to eligible Canadians are indexed to inflation on a quarterly basis, meaning that such benefit amounts increase to reflect that indexing at the beginning o...
The federal government imposes a 1% annual Underused Housing Tax (UHT) on the ownership of vacant or underused housing in Canada. While the tax usually applies to non-resident, non-Canadian owners it ...
Where the Canada Revenue Agency (CRA) owes an amount to the taxpayer (such as a tax refund), the Agency has the right to deduct from that amount any debts owed by the taxpayer to the federal governmen...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2023, as well as the rates that will apply for the purpose of cal...
Budget 2023 proposes to temporarily cap the inflation adjustment for excise duties on beer, spirits, and wine at two per cent, for one year only, as of April 1, 2023. The excise duty rates on all alco...
Budget 2023 proposes to amend the GAAR by: introducing a preamble; changing the avoidance transaction standard; introducing an economic substance rule; introducing a penalty; and extending the reasse...
Budget 2023 proposes to amend the rules introduced by Bill C-208 to ensure that they apply only where a genuine intergenerational business transfer takes place. To provide flexibility, it is proposed ...
Budget 2023 proposes to extend the qualifying family member measure (which allows a family member to open an RDSP for an adult relative) by three years, to December 31, 2026. Siblings will also be qua...
Budget 2023 proposes to increase limits on certain RESP withdrawals from $5,000 to $8,000 for full-time students, and from $2,500 to $4,000 for part-time students. Budget 2023 also proposes to allow d...
Budget 2023 proposes to double the maximum employment deduction for tradespeople’s and apprentice mechanics’ tools from $500 to $1,000, effective for 2023 and subsequent taxation years....
The CRA’s automatic tax filing service called “File My Return”, which reached some 53,000 Canadians in 2022, will be expanded to reach more than 2 million Canadians by 2025. The government will ...
Budget 2023 proposes to introduce an increase to the maximum GST/HST tax credit (“GSTC”) amount for January 2023 that would be known as the Grocery Rebate. Eligible individuals would receive an ad...
The federal government proposes to: Increase the Alternative Minimum Tax (“AMT”) capital gains inclusion rate from 80% to 100%. Capital loss carry forwards and allowable business investment losse...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
The most recent release of Statistics Canada’s Consumer Price Index puts the overall rate of inflation for the month of February 2023 at 5.2%, as compared to the 5.9% rate recorded for January. Both...
As part of the 2022 Federal Budget, the federal government introduced the Tax-Free First Home Savings Account (FHSA). The FHSA allows eligible taxpayers to contribute $8,000 per year (to a lifetime ma...
The Minister of Finance has announced that the 2023-24 Federal Budget will be brought down on Tuesday March 28, 2023, at around 4 p.m. EST. The media release providing the budget date can be found on ...
The Canada Revenue Agency (CRA) provides taxpayers with several telephone help lines, through which taxpayers can obtain both general tax information and information specific to their tax situation. T...
For the first time since January of 2022, the Bank of Canada has determined that no increase to current interest rates is needed. Consequently, the Bank Rate remains at 4.75%. In the press release ann...
Taxpayers are entitled to make a claim on their annual return for costs incurred in certain circumstances for meal costs and vehicle expenses. Such costs may, for instance, be claimable by individuals...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation continues to moderate. The inflation rate for the month of January 2023 stood at 5.9%, as...
In 2022, the federal government announced the creation of a top-up to the existing Canada Housing Benefit, which would provide a one-time payment of $500 to lower income individuals who pay a dispropo...
Millions of Canadians received federal government benefits during the pandemic, and those benefits represented income which must be reported on the annual tax return. The CRA will, by the end of Febru...
The most recent release of Statistics Canada’s Labour Force Survey shows that, while there was an increase in employment during January 2023, the unemployment rate was unchanged at 5.0%. Employment ...
The Canada Revenue Agency has announced that the tax payment deadline for individual income taxes owed for the 2022 tax year will be Monday May 1, 2023. While the payment deadline is usually April 30,...
The Canada Revenue Agency has announced that the filing deadline for individual income tax returns for the 2022 tax year will be Monday May 1, 2023. While the filing deadline is usually April 30, an e...
The Canada Revenue Agency has announced that the deadline for making registered retirement savings plan (RRSP) contributions which can be deducted on the return for the 2022 tax year will be Wednesday...
The Canada Revenue Agency (CRA) has issued the tax package to be used for the filing of individual income tax returns for the 2022 tax year. That package, which includes both the income tax return and...
The Canada Revenue Agency (CRA) has announced that its NETFILE service for filing of federal individual income tax returns for the 2022 tax year will be available on Monday February 20, 2023. Informat...
While the majority of Canadian taxpayers file their individual income tax returns electronically, a significant number of taxpayers file a paper return. The Canada Revenue Agency has issued a Tax Tip ...
In its regularly scheduled interest rate announcement made on January 25, the Bank of Canada announced that interest rates would be increased by one-quarter percentage point. That change marks the eig...
The Canada Revenue Agency has announced that its NETFILE service for the filing of prior year returns will be available until January 27, 2023. Specifically, NETFILE and ReFILE services for tax years ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation declined slightly during the month of December 2022. For that month, inflation stood at 6...
Finance Canada is currently conducting the consultation process leading to the release of the 2023-24 federal Budget this spring. There are two parts to the budget consultation process – an online s...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of December 2022 stood at 5.0%. During the month of December, the country ad...
The federal government has announced the amounts which may be paid as benefits under the Canada Pension Plan (CPP) during 2023. The amount of retirement benefit receivable by an individual is based on...
The federal government has announced the amounts which will be paid to recipients of Old Age Security benefits for the first quarter of 2023. Such benefit amounts are indexed quarterly, based on the c...
The Bank of Canada announces its decision with respect to interest rates on eight scheduled dates each year, and the Bank has provided the dates on which such interest rate announcements will be made ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first quarter of 2023, as well as the rates that will apply for the purpose of ...
The federal government is providing a one-time non-taxable $500 payment to assist eligible Canadians who pay more than 30% of their income for rental housing, and the application process for that bene...
Individual taxpayers who pay income tax for the year through instalment payments do so by four prescribed deadlines each year. The fourth and final instalment payment for the 2022 tax year must be mad...
In its regularly scheduled interest rate announcement made on December 7, the Bank of Canada announced that interest rates would be increased by one-half percentage point. That change marks the sevent...
Most Canadians are eligible to receive Old Age Security (OAS) benefits after they turn 65 (although receipt of such benefits can be deferred to as late as age 70). Regardless of the age at which recei...
The Canada Revenue Agency (CRA) has updated and re-issued its publication T4130 Employers’ Guide – Taxable Benefits and Allowances. The Guide, which can be found on the CRA website at T4130 Employ...
Canadians over the age of 17 can make annual contributions (up to a specified maximum) to a tax-free savings account (TFSA). While contributions made are not deductible from income, all investment inc...
Each year, personal income tax brackets and tax credit amounts are increased to reflect year-over-year changes in the Consumer Price Index. The Canada Revenue Agency has announced that the indexing fa...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of October 2022 stood at 5.2%.During that month, employment increased among ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of October stood at 6.9%, the same rate recorded for the month of September...
The federal government has announced the amount of Employment Insurance (EI) premiums which will be payable by employees and employers during the 2023 calendar year. The 2023 EI premium rate is $1.63 ...
The Canada Workers Benefit is a refundable tax credit provided by the federal government to lower income Canadians who have “earned working income” during the year. The credit of up to $1,428 for ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
The Canada Revenue Agency (CRA) has announced that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2023 will be $66,600. The basic exemption amount for 2023 remains $3,500. Th...
In its regularly scheduled interest rate announcement made on October 26, the Bank of Canada once again announced an increase in interest rates, bringing the Bank Rate to 4.00%. The most recent change...
The characterization of an individual as an employee or as a self-employed taxpayer affects both the tax treatment of that individual’s income and the remittance and filing obligations which are imp...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
The most recent release of Statistics Canada’s Consumer Price Index shows that inflationary increases in the price of food continue to outpace the overall inflation rate.During September, that overa...
The Canada Revenue Agency has announced that administrative tax relief will be provided to taxpayers living in Atlantic Canada who were affected by Hurricane Fiona. Specifically, the CRA has announced...
The most recent release of Statistics Canada’s Labour Force Survey shows that there was little change in the overall employment picture for the month of September. The unemployment rate for that mon...
The federal government has announced that maximum payments under the Old Age Security (OAS) program will increase for the October to December 2022 benefit period. For that period, and owing to changes...
While the last of the pandemic benefit programs for Canadian businesses ended as of May 7, 2022, eligible businesses have up to 180 days after the end of a benefit claim period to apply for such benef...
Finance Canada has announced that it plans to provide a one-time payment of $500 under the Canada Housing Benefit program, to assist individuals and families who must allocate a significant portion of...
The federal government has announced that, for a period of 30 days (until October 24, with the possibility of extension), it will match donations made to the Canadian Red Cross for storm relief effort...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of August was down slightly. That rate stood at 7.0% (as measured on a year...
The federal government provides eligible Canadians with a GST/HST tax credit, with the amount of credit receivable based on family composition, size, and income. For the July 2022 through June 2023 b...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate for the month of August rose slightly, to 5.4%. Among demographic groups, employment fell among yo...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for 2022, as well as the rates that will apply for the purpose of calculating employee ...
In its regularly scheduled interest rate announcement made on September 7, the Bank of Canada once again announced an increase in interest rates, bringing the Bank Rate to 3.50%. The most recent chang...
Canadian employees have tax deducted from their income at source – that is, the employer deducts income tax from the employee’s wages and then remits such tax to the federal government on the empl...
Individual taxpayers who pay income tax by instalment are required to make such payments quarterly. The third instalment payment deadline for the 2022 tax year falls on Thursday September 15, 2022. Mo...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
All Canadian resident corporations, regardless of size, are required to file a T2 corporation income tax return annually. The Canada Revenue Agency (CRA) has issued a Tax Tip for such corporate filers...
In this year’s budget, the federal government announced that, beginning in 2023, first-time home buyers would be able to save for a home purchase on a tax-free basis, through the new Tax-Free First ...
The most release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of July, as measured on a year-over-year basis, stood at 7.6%. The comparable rate for Jun...
The benefit year for most individual tax credit and benefit programs administered by the Canada Revenue Agency runs from July 1 to the following June 30, and benefit amounts change with each year. The...
The most recent release of Statistics Canada’s Labour Force Survey shows that the rate of unemployment for the month of July was unchanged, at 4.9%. Employment was down in Ontario and Prince Edward ...
Since 2009 Canadians have been able to save on a tax-sheltered basis through Tax Free Savings Accounts, or TFSAs. While TFSA contributions made are not tax-deductible, investment income earned by cont...
The Bank of Canada has released the schedule on which it will make interest rate announcements during the 2023 calendar year. Those announcements will be made on the following dates: January 25, Mar...
The prescribed leasing interest rate mandated by the Canada Revenue Agency must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescrib...
Canadian individual taxpayers who pay income tax by instalments make such payments four times a year, on prescribed dates. The third such instalment payment for 2022 is due and payable on or before Th...
The Canada Child Benefit is a non-taxable payment made monthly by the federal government to eligible families having children under the age of 18. There are two benefit levels – one for children und...
The July release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation reached 8.1% for the month of June, as measured on a year-over-year basis. That 8.1% figure was ...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of June fell by 0.2%, to a new record low of 4.9%. Statistics Canada, howeve...
In its regularly scheduled interest rate announcement made on July 13, the Bank of Canada increased interest rates by a full percentage point. Consequently, the Bank Rate now stands at 2.75%, the high...
While the remaining pandemic benefit relief programs for businesses ended on May 7, 2022, the application process for such benefits for 2022 is still open. Applications are made and benefits paid sepa...
The federal government has announced that maximum payments under the Old Age Security (OAS) program will increase for the July to September 2022 benefit period. Two changes will take effect as of July...
The Office the Superintendent of Financial Institutions (OSFI) has announced that changes will be made with respect to maximum borrowings permitted under some “combined loan plans”. Those products...
For many federal tax benefits, including the GST/HST credit, the Canada Child Benefit, the Canada Workers Benefit, and the Climate Action Incentive Payment, the new benefit payment year starts on July...
The federal government provides residents of Ontario, Alberta, Manitoba, and Saskatchewan with a Climate Action Incentive (CAI) intended to help offset the cost of the federal carbon tax. In previous ...
The overall inflation rate for the month of May, as measured on a year-over-year basis, stood at 7.7% – nearly a full percentage point higher than the 6.8% increase recorded for the month of April 2...
Effective as of July 1, 2022, the monthly Old Age Security benefit will be increased by 10% for recipients aged 75 and older. Recipients who turn 75 after July 1, 2022 will see the increase in their b...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall rate of unemployment for the month of May stood at 5.1% – marking a new record low for the third consecuti...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first three quarters of 2022, as well as the rates that will apply for the purp...
Individual taxpayers who pay income tax by instalment are required to make such payments quarterly. The second instalment payment deadline for the 2022 tax year falls on Wednesday June 15, 2022. Most ...
While all individual taxpayers were required to pay any balance of taxes owed for the 2021 tax year on or before April 30, 2022, self-employed taxpayers (and their spouses) benefit from a later tax re...
As anticipated, in its scheduled interest rate announcement made on June 1, the Bank of Canada raised interest rates by another one-half percentage point. This latest change brings the Bank Rate to 1....
The Canada Revenue Agency recently updated and re-issued its Guide RC4466 to the Tax-Free Savings Account (TFSA). The updated Guide includes information on determining TFSA contribution room, permitte...
The CRA has issued a new Tax Tip for tax filers who become aware, after the return has been filed, that their income tax return for 2021 contains an error. In all cases taxpayers should wait until the...
At the beginning of the pandemic in 2020, more than 8 million Canadians applied for and received the Canada Emergency Response Benefit (CERB). In applying for the CERB, recipients self-assessed their ...
The most recent release of Statistics Canada’s Consumer Price Survey shows that the overall rate of inflation reached 6.8% for the month of April 2022, as measured on a year-over-year basis. The lar...
Most of the pandemic benefit programs which the federal government has provided over the past two years came to an end on May 7, 2022. Notwithstanding the ending of the programs, applications for bene...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate for the month of April stood at 5.2%, down 0.1% from the rate recorded for March 2022. Among demog...
The federal government provides a non-refundable tax credit to first time home buyers (defined as individuals who have not owned and lived in a home in the current year or any of the previous four yea...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of March 2022 (as measured on a year-over-year basis) was the highest such rate sin...
Under current legislation, three major pandemic benefit programs for individuals are scheduled to expire on May 7, 2022. The Canada Recovery Sickness Benefit, the Canada Recovery Caregiving Benefit, a...
Since 2016, the federal government has provided a non-refundable tax credit for home renovation expenses undertaken to increase accessibility. Individuals eligible for this credit include those who ar...
In some instances, seniors who were eligible for the federal Guaranteed Income Supplement (GIS) and who received pandemic benefits during 2020 saw their GIS benefit amounts reduced or eliminated begin...
All Canadian individual taxpayers are required to pay income tax balances owed for 2021 on or before Monday May 2, 2022. Where payment is not made on or before that date, interest will be levied on al...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of March stood at 5.3%. That rate is the lowest rate on record since compara...
In its regularly scheduled interest rate announcement made on April 13, the Bank of Canada determined that an increase in interest rates was warranted. Following that increase, the Bank Rate stands at...
The proposed federal excise duty framework for vaping products would come into force on October 1, 2022. Retailers may continue to sell until January 1, 2023, unstamped products that are in inventory ...
Budget 2022 proposes to amend the Excise Tax Act to make all assignment sales in respect of newly constructed or substantially renovated residential housing taxable for GST/HST purposes....
Budget 2022 proposes targeted amendments to the Income Tax Act to align the taxation of investment income earned and distributed by “substantive CCPCs” with the rules that currently apply to CC...
Budget 2022 announces a consultation process for Canadians to share views as to how the existing rules could be modified to protect the integrity of the tax system while continuing to facilitate genu...
In order to facilitate small business growth, Budget 2022 proposes to extend the range over which the business limit is reduced based on the combined taxable capital employed in Canada of the Canadia...
Budget 2022 proposes to broaden the Medical Expense Tax Credit to recognize circumstances that involve medical expenses for individuals other than the intended parents....
Budget 2022 proposes to introduce a Labour Mobility Deduction for Tradespeople to recognize certain travel and relocation expenses of workers in the construction industry....
Profits arising from dispositions of residential property (including a rental property) that was owned for less than 12 months would be deemed to be business income....
Budget 2022 proposes to increase the annual expense limit of the Home Accessibility Tax Credit from $10,000 to $20,000....
This new refundable credit would provide recognition of eligible expenses for a qualifying renovation....
Budget 2022 proposes to double the Home Buyers’ Tax Credit amount from $5,000 to $10,000, which would provide up to $1,500 in tax relief to eligible home buyers....
Budget 2022 proposes to create the Tax-Free First Home Savings Account, a new registered account to help individuals save for their first home....
The Old Age Security (OAS) benefit payable to most Canadians over the age of 65 is indexed to inflation, with the benefit being adjusted at the beginning of each calendar quarter. For the second quart...
Many Canadian taxpayers work in the “gig” economy – holding down part-time, contract, or on-call positions or providing services to clients through online platforms, or some combination of those...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of February dropped by a full percentage point, from 6.5% to 5.5%. While emp...
The Minister of Finance has announced that the federal budget for the upcoming 2022-23 fiscal year will be brought down on Thursday April 7, 2022, at around 4 p.m. The announcement of the budget date ...
The Canada Revenue Agency provides an individual tax enquiries line where taxpayers can obtain general tax information, or information specific to their personal taxes. While the individual tax enquir...
Millions of Canadians earn money each year from online or digital sales transactions, often through platforms like Etsy or eBay. The Canada Revenue Agency recently issued a Tax Tip, reminding taxpayer...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2022, as well as the rates that will apply for the purpose of cal...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation during the month of February 2022 reached 5.7% (as measured on a year-over-year basis), t...
Canadian individual taxpayers can claim a deduction for a number of expenses which they incur in the course of their employment. For 2021, those deductible expenses can include a flat rate deduction f...
The Canada Revenue Agency’s (CRA) NETFILE service for the filing of individual income tax returns for the 2017, 2018, 2019, 2020 and 2021 tax years is available 21 hours each day. The hours of servi...
Canadian individual taxpayers can now file their income tax returns for the 2021 tax year using the Canada Revenue Agency’s (CRA) NETFILE tax service. That service, which will be available until Fri...
In its regularly scheduled interest rate announcement made on March 2 the Bank of Canada, as expected, announced an increase to interest rates. Specifically, the Bank Rate has been increased from 0.50...
Dollar amounts on which individual non-refundable federal tax credits for 2022 are based, and the actual tax credit claimable, will be as follows: ...
The indexing factor for federal tax credits and brackets for 2022 is 2.4%. The following federal tax rates and brackets will be in effect for individuals for the 2022 tax year. Income level ...
During the 2021 tax year, many employees continued to work from home for pandemic-related reasons. Such employees may be eligible to claim a deduction for specified home office related expenses incurr...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of January 2022 stood at 5.1%, as measured on a year-over-year basis. The last prev...
Canadian individual taxpayers are entitled to claim a non-refundable tax credit for qualifying medical expenses incurred. Detailed information on the rules governing the types of expenses which qualif...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate rose slightly during the month of January, from 6% to 6.5%. The change marked the first su...
Post-secondary students filing a return for the 2021 tax year are entitled to claim a number of tax credits and deductions for education-related expenses which they incur, in addition to the credits a...
The Canada Revenue Agency (CRA) has announced that its NETFILE service for online filing of individual income tax returns for the 2021 tax year will be available on Monday February 21, 2022. In order ...
The January release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of December 2021 (as measured on a year-over-year basis) reached 4.8%. While pr...
In its regularly scheduled interest rate announcement made on January 26, the Bank of Canada indicated that, in its view, no change to current rates was needed. Consequently, the Bank Rate remains at ...
Taxpayers who filed their income tax return on paper last year will automatically receive the 2021 income tax package from the Canada Revenue Agency (CRA) by February 21, 2022. The package taxpayers w...
The Canada Revenue Agency (CRA) has announced the automobile expense deduction limits which will apply during the 2022 taxation year. Owing to increases in the Consumer Price Index, most such limits h...
The Canada Revenue Agency (CRA) has announced that individual (T1) income tax return forms for the 2021 tax year will be available on the Agency’s website on January 18, 2022. Such returns must be f...
In October 2021, the federal government announced the creation of a new pandemic benefit, the Canada Worker Lockdown Benefit (CWLB), which was intended to be provided to workers affected by regional p...
The amount of Old Age Security (OAS) benefit paid to eligible Canadians is adjusted each quarter to take account of increases in the Consumer Price Index. Based on recent increases to the Consumer Pri...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first quarter of 2022, as well as the rates that will apply for the purpose ...
The Canada Revenue Agency (CRA) has issued the TD1 form to be used by all Canadian resident employees for the 2022 tax year. On the TD1 form, the employee indicates the federal personal tax credit amo...
Canadian taxpayers who have a registered retirement savings plan (RRSP) must collapse that RRSP by the end of the year in which the taxpayer turns 71. Such taxpayers are entitled to make a final RRSP ...
As part of the Economic and Fiscal Update, the federal government announced that small businesses would be provided with a refundable Small Businesses Air Quality Improvement Tax Credit. That credit, ...
As part of pandemic relief measures, changes were made to the existing home office expense deduction for employees. Those changes, which were for the 2020 tax year only, allowed employees to use a fla...
Individual taxpayers who pay income tax for the year through instalment payments do so by four prescribed deadlines each year. The fourth and final instalment payment for the 2021 tax year must be mad...
The 2021 Economic and Fiscal Update will be delivered by the Minister of Finance on Tuesday, December 14 at around 4 p.m. The update is expected to include information on the current state of the Cana...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Revenue Agency (CRA) has posted a Tax Tip on its website reminding individuals who have been affected by the recent extreme weather events of the availability of the Taxpayer Relief Program...
The fourth and final income tax instalment payment deadline for individuals for 2021 falls on Wednesday December 15. Taxpayers who pay income tax by instalment will have received an Instalment Reminde...
The Canada Revenue Agency (CRA) publishes a guide for post-secondary students which outlines the tax treatment of the types of income and expenses (like scholarship income and tuition expenses) which ...
The Canada Revenue Agency (CRA) has released the indexing factor which will apply for purposes of determining individual income tax brackets and non-refundable tax credits for 2022. That indexing fact...
The most recent release of Statistics Canada’s Consumer Price Index (CPI) shows that during the month of October inflation rose by 4.7%, as measured on a year-over-year basis. That increase marked t...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate declined slightly during the month of October, from 6.9% to 6.7%. Employment held steady f...
The federal government has announced the premium rates and amounts which will apply for purposes of the Employment Insurance program during the 2022 calendar year. For 2022, maximum insurable earnings...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Revenue Agency (CRA) has released the contribution rates and amounts which will apply with respect to the Canada Pension Plan (CPP) during the 2022 calendar year. For 2022, the employer and...
In its regularly scheduled interest rate announcement made on October 27, the Bank of Canada indicated that, in its view, no change was required to current interest rates. Accordingly, the Bank Rate r...
The most recent release of Statistics Canada’s Consumer Price Index indicates that the rate of inflation, as measured on a year-over-year basis, rose by 4.4% during the month of September. The compa...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Revenue Agency (CRA) has announced that new security measures have been made available with respect to the authorization of online representatives by taxpayers. Generally, representatives a...
The federal government currently provides a range of pandemic benefit programs, for both individuals and businesses, and a number of those programs are scheduled to end on Saturday October 23, 2021. H...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate declined during the month of September, by 0.2 percentage points. The September unemployme...
The federal government has announced the premium rates and amounts which will apply for purposes of Employment Insurance during the 2022 calendar year. The contribution rates for both employers and em...
The amount of Old Age Security (OAS) benefit paid to eligible Canadians is adjusted each quarter to take account of increases in the Consumer Price Index. Based on recent increases to the CPI, the fed...
In the 2020 Fall Economic Statement, the federal government announced that, as part of its pandemic relief measures, an additional amount would be paid during 2021 to qualifying families who were elig...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for 2021, as well as the rates that will apply for the purpose of calculating employ...
A number of pandemic relief benefit programs provided to individual Canadians are currently scheduled to end as of October 23, 2021. Those programs are as follows: Canada Recovery Benefit Canada Reco...
The latest release of Statistics Canada’s Consumer Price Index shows that the rate of inflation, as measured on a year-over-year basis, rose by 4.1% during the month of August, as compared to the 3....
The most recent release of Statistics Canada’s Labour Force Survey shows a decline in the overall unemployment rate during the month of August. During that month, the rate declined by 0.4%, to 7.1%....
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Individual taxpayers who pay income tax for the year through instalment payments do so by four prescribed deadlines each year. The third of those deadlines falls on Wednesday September 15, 2021. Taxpa...
In its regularly scheduled interest rate announcement made on September 8, the Bank of Canada (the “Bank”) indicated that, in its view, no change to current rates was needed. Accordingly, the Bank...
Each year, on pre-announced dates, the Bank of Canada releases its decision on any changes to current interest rates. The Bank recently issued a listing of the dates on which such interest rate announ...
The benefit year for many federal tax credits, including the GST/HST tax credit, runs from July 1 to June 30 of the following year. Each year, credit amounts change, as do the income thresholds which ...
In July of this year, the federal government announced that the Canada Emergency Wage Subsidy (CEWS) program would be extended to be available to employers until October 2021. The Canada Revenue Agenc...
This year’s federal Budget included a proposal for a “luxury tax” which would apply, at varying rates, to sales of specified goods over a prescribed price threshold. The proposal indicated that ...
The Canadian tax system provides credits and incentives for taxpayers who carry out qualifying scientific research and experimental development (SR&ED) work. When claims are made for such credit a...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of July, as measured on a year-over-year basis, stood at 3.7%. The comparable rate ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Individual taxpayers who pay income tax by instalments must make the third instalment payment of the year on or before Wednesday September 15, 2021. Such taxpayers should receive an Instalment Reminde...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of June, as measured on a year-over-year basis, reached 3.1%. That rate was slightl...
The federal government has announced that a number of pandemic relief benefit programs, for both businesses and individuals, have been extended. The changes announced are as follows. The eligibility p...
The federal government administers the Canada Workers Benefit (CWB), a refundable tax credit which supplements income amounts for lower-income working Canadians. The annual benefit amount is $1,400 fo...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
As announced in this year’s federal Budget, some recipients of Old Age Security will receive a one-time supplement, to be paid in August 2021. During that month, OAS recipients who were born on or b...
The current benefit year for the Canada Child Benefit runs from July 1, 2021 to June 30, 2022. The federal government recently announced that Child Tax Benefit amounts for this benefit year have been ...
The most recent release of Statistics Canada’s Labour Force Survey shows a rebound in employment, as pandemic-related public health restrictions were eased in several provinces. For the month of Jun...
In its regularly scheduled interest rate announcement made on July 14, the Bank of Canada indicated that, in its view, no change to current rates was required. Accordingly, the Bank Rate remains at 0....
The Old Age Security benefit administered by the federal government is adjusted quarterly to reflect the rate of inflation. The federal government has announced that the maximum basic OAS benefit paya...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first three quarters of 2021, as well as the rates that will apply for the p...
In its regularly scheduled interest rate announcement made on June 9, 2021, the Bank of Canada determined that, in its view, no change to current rates was needed. Accordingly, the Bank rate remains a...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first three quarters of 2021, as well as the rates that will apply for the p...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
Canadian companies are required to file their federal income tax returns within 6 months after their fiscal year end. Consequently, companies which had a calendar year end on December 31, 2020 must fi...
While there was little change in the overall unemployment rate for the month of May, employment did fall by 68,000 positions, most of those in part-time work. The overall unemployment rate for the mon...
The most recent release of Statistics Canada’s Consumer Price Index shows an increase of 3.6% increase in the rate of inflation for the month of May, as measured on a year-over-year basis. The comp...
For individuals who pay income tax through quarterly instalments, the second instalment payment deadline for the year is Tuesday June 15, 2021. Information on the instalment payment system, including ...
The filing deadline for income tax returns for the 2020 tax year for self-employed individuals and their spouses is Tuesday June 15, 2021. Information on that filing deadline and on available filing m...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In 2020, some self-employed Canadians received Canada Emergency Relief Benefits (CERB) to which they were not entitled, as the result of erroneous information provided by the federal government, and t...
The Canada Revenue Agency (CRA) has posted a Tax Tip on its website outlining the several methods taxpayers can use to make a change, or correct an error, on an already-filed return. Requests for chan...
Last year, the federal government announced that families who are eligible for the Canada Child Benefit in 2021 and have a child or children under the age of six could receive a supplement — the Can...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of April 2021 was up by 3.4%, as measured on a year-over-year basis. Statistics Can...
The Canada Revenue Agency (CRA) has issued a warning to taxpayers with respect to a tax scheme currently being promoted, typically to homeowners who have significant equity in their homes and substant...
Taxpayers who are unable to file their returns or make payment of taxes owed on a timely basis for reasons outside their control (including financial hardship) can apply, under the Taxpayer Relief Pro...
The most recent release of Statistics Canada’s Labour Force Survey shows an increase in the rate of unemployment during the month of April 2021. That rate, as measured on a year-over-year basis, ros...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of March 2021 was 2.2%, as measured on a year-over-year basis. While the monthly in...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In its regularly scheduled interest rate announcement made on April 21, the Bank of Canada indicated that, in its view, no change to current rates was warranted. Accordingly, the Bank Rate remains at ...
The deadline for payment of all individual income tax amounts owed for the 2020 tax year is Friday, April 30, 2021. For most individuals (other than self-employed taxpayers and their spouses), April 3...
The Budget includes proposals to address perceived anti-avoidance activity and failures by taxpayers to comply with transaction reporting rules. To address the issue of failure to report, the governme...
The federal government provides two tax credit programs for the film and television industry. The Canadian Film or Video Production Tax Credit (CPTC) provides a 25% refundable tax credit on qualified ...
In the Budget, the federal government announced that the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy, and the Lockdown Support programs, which are currently scheduled to expire on...
Under Canada’s capital cost allowance (CCA) system, an asset is written off over a period of years, at a prescribed percentage rate per year, based on the useful life of that asset. Acquisitions of ...
The Budget includes a proposal for a temporary measure to reduce corporate income tax rates for qualifying zero-emission technology manufacturers. Specifically, taxpayers would be able to apply reduce...
Under Canadian tax rules, companies which acquire capital assets are required to deduct, or write off, the cost of those assets over a period of years, under the rules provided in the Capital Cost All...
The federal Budget includes a proposal for a Canada Recovery Hiring Program. That program will provide eligible employers with a subsidy of up to 50% on the incremental remuneration paid to eligible e...
The Budget papers provide that public corporations which received the Canada Emergency Wage Subsidy will, in some instances, be required to repay part or all of that subsidy. Specifically, where the t...
Current rules provide that tax preparers and filers of information returns who file more than a prescribed number of returns each year must file such returns electronically. Those rules will be amende...
Changes are proposed to the rules to increase the ability of the Canada Revenue Agency (CRA) to communicate with taxpayers electronically, without the taxpayer having to authorize the CRA to do so. Ge...
The Canada Revenue Agency has the authority to revoke the charitable registration status of an organization where that organization fails to fulfill its legal obligations. The rules governing such rev...
Millions of Canadian taxpayers received pandemic benefits during the 2020 taxation year. While most such recipients were entitled to those benefits, there were instances in which the benefits were pai...
Postdoctoral fellows are generally not, for purposes of the income tax system, considered to be students. Consequently, postdoctoral fellowship income does not qualify for the exemption generally prov...
Canadians who live in prescribed northern areas of Canada for at least six consecutive months in a year are eligible for the Northern residents deduction. That deduction has both a residency component...
The Canada Workers’ Benefit (CWB) is a non-taxable refundable tax credit that supplements the earnings of low-income and medium-income workers. The CWB, which is generally available to workers who e...
The federal government provides qualifying individuals with a disability tax credit (DTC) which reduces federal tax otherwise payable. For 2021, the value of the DTC is $1,299. To qualify for the DTC,...
The tax return completed by individual Canadians changes from one year to the next, as tax credits or deductions are introduced, eliminated, or changed, or reporting requirements are altered. The Cana...
The filing deadline for most individual income tax returns for the 2020 taxation year is Friday, April 30, 2021. Self-employed individuals and their spouses are not required to file their returns unti...
Last year, the federal government provided a deferral of the payment deadline for individual income taxes owed. No such deferral is allowed for this year, meaning that any balance of individual income...
The federal government, through the Canada Recovery Sickness Benefit, provides a weekly benefit of $500 to qualifying individual Canadians who are unable to work because they are sick or need to self-...
While gains made on a sale of a principal residence in Canada are generally tax exempt, there are reporting requirements imposed on such sales. In addition, certain tax credits may be claimed by home ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first half of 2021, as well as the rates that will apply for the purpose of ...
The most recent release of Statistics Canada’s Consumer Price Index shows a slight increase in the rate of inflation for the month of February 2021. That rate stood at 1.1%, as compared to the rate ...
The Minister of Finance has announced that the federal Budget for the upcoming 2021-22 fiscal year will be delivered on Monday April 19, 2021. This year’s Budget will be the first one delivered sinc...
Over the past month, the Canada Revenue Agency (CRA) identified a large number of individual taxpayer online accounts for which user IDs and passwords had been obtained by unauthorized third parties. ...
The most recent release of Statistics Canada’s Labour Force Survey shows a significant increase in employment during the month of February. During that month, employment rose by 259,000 jobs, and th...
As expected, the Bank of Canada announced on March 10 that no changes would be made to current interest rates. Accordingly, the Bank Rate remains at 0.5%. In the press release announcing its decision,...
The Canada Revenue Agency (CRA) has announced that targeted interest relief will be provided to Canadians who received pandemic income support benefits during 2020. Specifically, qualifying individual...
The most recent release of Statistics Canada’s Consumer Price Survey shows a slight increase in the rate of inflation for January 2021. The inflation rate for that month, as measured on a year-over-...
The Canada Revenue Agency’s (CRA) NETFILE service for the filing of individual income tax returns for the 2017, 2018, 2019, and 2020 tax years is now available 21 hours a day, 7 days a week. The ser...
The Canada Revenue Agency (CRA) has issued the guide to be used by taxpayers who are reporting business or professional income, commission income, and income from farming and fishing received during 2...
The Canada Revenue Agency (CRA) has announced that, beginning February 27, 2021, its Individual Tax Enquiries line will be available on Saturdays, from 9 a.m. to 5 p.m. That service is also available ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
The Canada Revenue Agency (CRA) has announced that its individual income tax enquiries line will be open for extended hours during the upcoming tax filing season. That line — reachable at 1-800-959-...
The Canada Revenue Agency’s (CRA) NETFILE service for the online filing of individual income tax returns for the 2020 taxation year will be available starting Monday, February 22, 2021. In order to ...
The most recent release of Statistics Canada’s Labour Force Survey shows a significant decline in employment during the month of January, and a corresponding increase in the overall unemployment rat...
The Canada Revenue Agency (CRA) has issued the individual income tax forms and guides to be used by Canadian residents in filing an income tax return for the 2020 taxation year. The particular form to...
The federal government has launched the consultation process leading to the release of the 2021-22 federal Budget. This year, there are three components to the consultation process. The government wil...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In its regularly scheduled interest rate announcement made on January 20 the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remains at 0....
The Canada Revenue Agency (CRA) has issued an updated version of Guide T4044, Employment Expenses 2020, which outlines the tax treatment of various employment expenses, and will be used by taxpayers i...
The most recent release of Statistics Canada’s Consumer Price Survey shows that the rate inflation rose by 0.7% during the month of December 2020, as measured on a year-over-year basis. The rate for...
The Canada Revenue Agency (CRA) has released the automobile expense deduction limits and benefit rates which will apply during the 2021 taxation year. Most of the rates and limits which applied during...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of December 2020 increased to 8.6%. The comparable rate for the month of Nov...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first quarter of 2021, as well as the rates that will apply for the purpose ...
The Canada Revenue Agency’s (CRA) NETFILE service for the filing of individual income tax returns for the 2016, 2017, 2018, and 2019 taxation years will be available until Friday, January 22, 2021. ...
Post-secondary students in Canada are eligible for a range of tax credits and deductions, including a tuition tax credit, deductions for moving expenses, and a claim for qualifying student loan intere...
The Canada Revenue Agency (CRA) has announced that a new temporary home office tax credit may be claimable by qualifying individuals who worked from home during 2020. Taxpayers are eligible to use thi...
The Canada Revenue Agency (CRA) permits taxpayers to designate another person, firm, or business to communicate with the CRA on the taxpayer’s behalf, where a written authorization has been provided...
Taxpayers may apply to the Minister of National Revenue for administrative relief from interest and penalty charges imposed or, in some cases, for permission to late-file tax elections. In order to be...
In its regularly scheduled interest rate announcement made on December 9, the Bank of Canada announced that no change would be made to current interest rates. Accordingly, the Bank Rate remains at 0.5...
The most recent release of Statistics Canada’s Labour Force Survey shows that the rate of unemployment declined by 0.4% during the month of November. The unemployment rate for the month was 8.5%. Fu...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
On November 30, the Minister of Finance released the Fall Economic Statement, which included updated deficit projections for the current and future fiscal years. The deficit is now projected to reach ...
The federal government has announced that the program providing a wage subsidy to eligible businesses experiencing a pandemic-related revenue loss has been extended to be available until June 2021. Th...
The federal government has announced that its Fall Economic Statement for the 2020-21 fiscal year will be released on Monday November 30, 2020. The press release announcing the date and time of the St...
The most recent release of Statistics Canada’s Consumer Price Survey shows that the rate of inflation for the month of October rose by 0.7%, as measured on a year-over-year basis. The comparable inc...
The federal government has released the premium rates and amounts which will apply in 2021 for purposes of the Employment Insurance (EI) program. For 2021, the EI premium rate will be 1.58% and maximu...
The Canada Revenue Agency (CRA) has announced upcoming changes in the allowable contribution limits for a range of retirement savings programs. For registered pension plans, the 2021 money purchase l...
The most recent release of Statistics Canada’s Labour Force Survey shows that the overall rate of unemployment stood at 8.9% for the month of October. While the unemployment rate for the month was l...
The tax treatment of non-monetary benefits provided by employers to their employees can vary widely. Some such benefits must be included in the employee’s taxable income for the year, while others a...
The Canada Revenue Agency (CRA) has announced the contribution rates and amounts which will apply for purposes of the Canada Pension Plan during 2021. For 2021, the employer and employee contribution ...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
In its October 28 announcement, the Bank of Canada indicated that, in its view, no change to current interest rates was needed. Accordingly, the Bank Rate remains at 0.5%. The press release announcing...
The Bank of Canada has released its schedule for policy interest rate announcements to be made during the 2021 calendar year, and that schedule is as follows: Wednesday, January 20 Wednesday, March 1...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation rose 0.5% on a year-over-year basis in September, up from a 0.1% increase in August. While pric...
In September, the Canada Emergency Response Benefit program came to an end, and three new programs to provide financial assistance to individuals impacted by the pandemic were launched. One of those p...
The most recent release of Statistics Canada’s Labour Force Survey shows that Canada’s overall unemployment rate declined by 1.2% during the month of September. For the month, that rate stood at 9...
The federal government has created three separate benefits which can be claimed by qualifying Canadians, following the end of the Canada Emergency Response Benefit (CERB) program. Applications for two...
The Canada Revenue Agency (CRA) has issued a warning to taxpayers with respect to a tax scam currently operating, which involves claims for bad debt write-offs. While bad debts can be written off for ...
The federal government has created three separate benefits which can be claimed by qualifying Canadians, following the end of the Canada Emergency Response Benefit (CERB) program. Applications for two...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for 2020, as well as the rates that will apply for the purpose of calculating employ...
The Old Age Security benefit received by Canadians over the age of 65 is indexed quarterly to changes in the Consumer Price Index. The federal government has announced that the basic OAS benefit of $6...
The prescribed leasing interest rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the pr...
As part of its pandemic relief plan, the federal government provided eligible post-secondary students and recent post-secondary and high school graduates who were unable to find work for pandemic-rela...
Canadian taxpayers who pay income tax by instalment usually make four instalment payments each year, by the 15th day of March, June, September, and December. Earlier this year, the federal government ...
Earlier this year, the Canada Revenue Agency (CRA) announced that the deadline for payment of individual income tax balances for the 2019 tax year, which is usually April 30, was being extended to Wed...
The September release of Statistics Canada’s Labour Force Survey shows that the overall unemployment rate for the month of August stood at 10.2%. That rate represented a decrease of 0.7% from the ra...
The federal government has announced an increase in the amount of any overtime meal allowance, or meal portion of a travel allowance, that employers can provide to employees on a non-taxable basis. Th...
Eligibility for a number of refundable tax credits and benefits, including the harmonized sales tax/goods and services tax credit and the child tax benefit is based in part on a taxpayer’s income fo...
The pandemic emergency benefit program provided by the federal government for post-secondary students and recent secondary and post-secondary graduates ended on August 29, 2020. Those eligible for suc...
Since March 15 of this year, Canadians who have lost income as a result of the pandemic have been able to receive $500 per week from the Canada Emergency Response Benefit (CERB). The CERB program will...
Earlier this month, a cyberattack on the Canada Revenue Agency (CRA) and other agencies of the federal government compromised the personal tax and financial information of approximately 5500 taxpayers...
On July 17, the federal government announced that the existing Canada Employer Wage Subsidy (CEWS) program would be extended to be available until November 21, 2020, and that eligibility criteria for ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of July, as measured on a year-over-year basis, stood at 0.1%. The comparable rate ...
The prescribed leasing rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescribed ...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate for July was 10.9%. The change means that the unemployment rate has fallen by 1.4 percentage poi...
Individual taxpayers who pay income tax by instalment are required to make four such instalment payments each year. The usual deadlines for such payments are the 15th day of March, June, September, an...
The Canada Revenue Agency (CRA) has posted a notice on its website indicating that it is experiencing delays in the processing of paper-filed individual income tax returns for the 2019 taxation year. ...
The Canada Revenue Agency (CRA) has announced that an interest waiver period will be provided to individual taxpayers with respect to income taxes owed. That waiver period will run from April 1 to Sep...
Earlier this year, the deadline for payment of individual income tax amounts owed for the 2019 taxation year was extended from April 30 to September 1, 2020. The federal government has now indicated t...
In its regularly scheduled interest rate announcement made on July 15, the Bank of Canada indicated that, in its view, no change to current interest rates was required. Accordingly, the Bank Rate rema...
The prescribed leasing rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescribed ...
Canadian employers whose businesses have been affected by the pandemic may be eligible for a federal government wage subsidy – the Canada Emergency Wage Subsidy (CEWS). The CEWS, which pays the empl...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight decline in the rate of unemployment during the month of June. The unemployment rate for June stood at 12.3%, a decli...
On July 8, the federal government provided an update of its fiscal position for the current (2020-21) fiscal year, taking in account expenditures made in connection with the pandemic. That “Economic...
Earlier this year, the federal government announced that, as part of its pandemic relief measures, recipients of Old Age Security would receive an additional one-time payment. Such payment is intended...
The Canada Revenue Agency (CRA) has issued a Tax Tip reminding Canadians that its online filing services for the filing of individual income tax returns for the 2019 tax year are still open. Such indi...
The Old Age Security benefit received by Canadians over the age of 65 is indexed quarterly to changes in the Consumer Price Index. The federal government has announced that, as the rate of inflation d...
The prescribed leasing rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescribed ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first three quarters of 2020, as well as the rates that will apply for the p...
The federal government has announced that the Canada Emergency Response Benefit (CERB) program has been extended to be available for a further eight weeks in some circumstances. As originally designed...
The most recent release of Statistics Canada’s Consumer Price Survey shows that the rate of inflation fell by 0.4% during the month of May, as measured on a year-over-year basis. Prices were up in f...
The prescribed leasing rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescribed ...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate rose slightly during the month of May, from 13% to 13.7%. The StatsCan analysis indicates that une...
In its regularly scheduled interest rate announcement made on June 3 the Bank of Canada, as anticipated. made no change to current rates. Accordingly, the Bank Rate remains at 0.5%. In its announcemen...
Self-employed Canadians and their spouses must file an individual income tax return for the 2019 tax year on or before June 15, 2020. As part of the federal government’s pandemic response plan, howe...
Individual Canadians who pay income tax by instalments would normally be required to make the second instalment payment for this year on June 15, 2020. The Canada Revenue Agency (CRA) has indicated, h...
The Canada Revenue Agency (CRA) has announced that the deadline for filing of T2 returns by corporations and T3 returns by trusts has been extended. That announcement provides that all businesses and ...
Each year community organizations across Canada operate a number of tax clinics at which individual income tax returns are prepared and filed free of charge to the taxpayer. Due to concerns surroundin...
The benefit year for many federal benefits, like the Canada Child Benefit and the Goods and Services Tax Credit runs from July 1 to June 30. Eligibility for and the amount of such benefits are based, ...
The Canada Revenue Agency has issued a reminder to Canadians that there are circumstances in which the Canada Emergency Response Benefit (CERB) must be repaid. In particular, individuals who return to...
The federal government has announced that, in order to help seniors with additional costs resulting from the pandemic, a one-time supplement will be provided to Canadians who already receive Old Age S...
The Canada Revenue Agency (CRA) has issued an alert on its website warning Canadians of a scam operating with respect to the Canada Emergency Response Benefit (CERB). That Benefit, for which more than...
As part of its pandemic response, the federal government is providing eligible employers with a partial wage subsidy through the Canada Emergency Wage Subsidy (CEWS) program. The CEWS program provides...
The prescribed leasing rate mandated by the Canada Revenue Agency (CRA) must be calculated using bond yield information found on the Bank of Canada website. That calculation shows that the prescribed ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2020, as well as the rates that will apply for the purpose ...
The April release of Statistics Canada’s Consumer Price Index shows a sharp decline in the rate of inflation for the month of March. That rate stood at 0.9%, as measured on a year-over-year basis. T...
The most recent release of Statistics Canada’s Labour Force Survey shows a significant increase in the rate of unemployment during the month of March. The April release of the Labour Force Survey, w...
The federal government has announced that required repayments of Canada Student Loans will be suspended until September 30th, 2020. Where payments are usually made by pre-authorized debit, such paymen...
In its regularly scheduled interest rate announcement made on April 15, the Bank of Canada indicated that, in its view, no change to current interest rates was required. Accordingly, the Bank Rate rem...
The federal government will be providing a wage subsidy program to eligible employers who have experienced a recent reduction in revenues of 30% or more. That program—the Canada Emergency Wage Subsi...
As of April 6, 2020, Canadians can apply for the federal Canada Emergency Response Benefit (CERB), which provides eligible individuals with $500 per week for a maximum of 16 weeks. The benefit is gene...
The federal government will be providing businesses with an extension with respect to remittance deadlines related to goods and services tax (GST) and harmonized sales tax (HST). The deferral will app...
In an unscheduled announcement made on March 27, the Bank of Canada lowered interest rates for the third time this month. In that announcement, the Bank reduced current rates by one-half percentage po...
The federal government has announced that, for the current benefit year only, the amount of Canada Child Benefit will be increased by a one-time payment of $300 per child. The $300 additional benefit ...
The deadline for filing of most 2019 individual income tax returns, as well as payment of any balance of tax owed for the 2019 taxation year by individual taxpayers would usually be April 30, 2020. Th...
Citing the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent drop in oil prices, the Bank of Canada has announced a further reduction in interest rates. The unsch...
The federal government has announced that the filing deadline for individual Canadian tax filers who would usually be required to file by April 30 has been extended to June 1, 2020. (Returns for 2019 ...
Canadian taxpayers who buy or sell a property during the year may be subject to requirements to report that transaction on their annual return and, in some cases, to pay tax on sale proceeds. The CRA ...
The most recent release of Statistics Canada’s Labour Force Survey shows little change in the overall unemployment rate during the month of February. That rate rose by 0.1%, to 5.6%. During the mont...
The Canada Revenue Agency’s individual income tax enquiries telephone service will be available for extended hours during tax filing season. That enquiries service, which can be reached at 1-800-959...
In its regularly scheduled interest rate announcement made on March 4 the Bank of Canada indicated that, in its view, a reduction to current interest rates was required. Accordingly, the bank rate was...
The Canada Revenue Agency (CRA) has released its 2019 Guide to Self-Employed Business, Professional, Commission, Farming and Fishing Income for 2019. That Guide is used by taxpayers who are reporting ...
The Canada Revenue Agency’s NETFILE service for the filing of individual income tax returns for the 2019 taxation year is now available. The current NETFILE service, which can be found on the CRA we...
The Canada Revenue Agency (CRA) has announced that contributions to a registered retirement savings plan (RRSP), in order to be deducted on the return for 2019, must be made on or before Monday March ...
The most recent release of Statistics Canada’s Consumer Price Index shows an increase in the rate of inflation for the month of January. That rate stood at 2.4%, as measured on a year-over-year basi...
The most recent release of Statistics Canada’s Labour Force Survey shows that that unemployment rate dropped slightly during the month of January, from 5.6% to 5.5%. During that month, employment in...
The rates and limits for deduction and credit claims for meal and travel expenses are now posted on the Canada Revenue Agency (CRA) website. Such rates and limits apply to meal and travel expense clai...
In the 2019 Budget, the federal government introduced a new tax credit for digital news subscription costs incurred by individuals. That tax credit is available starting in the 2020 tax year. Individu...
In the 2019 Budget, the federal government introduced a new tax credit for digital news subscription costs incurred by individuals. That tax credit is available starting in the 2020 tax year. Individu...
The Canada Revenue Agency (CRA) publishes a guide for post-secondary students which outlines the rules governing typical tax situations for such students. Those rules include the tax treatment of tuit...
The Canada Revenue Agency (CRA) has announced that the NETFILE service for online filing of individual income tax returns for the 2019 tax year will be available beginning Monday, February 24, 2020. M...
The Canada Revenue Agency (CRA) has released the Individual Income Tax Return and Guide for all provinces and territories for the 2019 tax year, and those forms and guides are posted on its website at...
In its regularly scheduled interest rate announcement made on January 22, 2020, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remain...
The Canada Revenue Agency has announced the rates and limits which will apply for purposes of automobile-related benefits and deductions in 2020. Most such rates and limits are unchanged, as follows: ...
The federal government has announced the Old Age Security (OAS) and related amounts which will be paid during the first quarter (January 1 to March 31) of 2020. OAS payments are indexed quarterly to c...
The most recent release of Statistics Canada’s Labour Force Survey shows that employment increased by 35,000 jobs during the month of December and that the overall unemployment rate fell by 0.3%, to...
The federal government has announced that the basic personal tax credit, the spousal credit, and the eligible dependant credit amounts will increase, in four stages, from $12,298 to $15,000. The first...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the first quarter of 2020, as well as the rates that will apply for the purpose ...
The Canada Revenue Agency (CRA) formerly provided taxpayers with a listing of prescribed interest rates for leasing, with such listing including the applicable rate for the upcoming month, as well as ...
The federal government has announced the amounts which will be paid under the climate action incentive program during 2020. Such amounts are claimed when filing the individual income tax return for 20...
Taxpayers who have not yet filed their individual income tax returns for 2018 (or the three prior years) can file those returns on NETFILE until Friday, January 24, 2020. Until that date, the Canada R...
The 2019 Economic and Fiscal Update released on December 16 by the Minister of Finance shows a significant increase in the projected deficit for the current fiscal year. In the 2019-20 Budget announce...
Canadians who pay income tax by instalments are required to pay the fourth and final instalment payment of 2019 on or before Monday December 16, 2019. Taxpayers subject to the instalment payment requi...
Under the federal government’s Taxpayer Relief Program, the Minister of National Revenue can provide relief to taxpayers from interest or penalty charges which have been assessed. Such taxpayer reli...
In its regularly scheduled interest rate announcement made on December 4, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remains at 2...
The Canada Revenue Agency has announced that personal income tax brackets and credit amounts for the 2020 taxation year will increase by 1.9%. Each year, such individual income tax brackets and cred...
The most recent release of Statistics Canada’s Consumer Price Index indicates that there was no change in the rate of inflation recorded for the month of October. That rate stood at 1.9%, as measure...
The Canada Revenue Agency has issued the 2020 version of Guide T4127, Payroll Deduction Formulas, which is intended for use by payroll software providers or companies which develop their own in-house ...
On Wednesday November 27, the Canada Revenue Agency (CRA) will be hosting a webinar on payroll requirements for Canadian employers. The webinar, which will start at 1:00 p.m. EST, is free of charge fo...
The Canada Revenue Agency (CRA) has updated and re-issued its tax guide for post-secondary students. That guide (P105, Students and Income Tax) reviews the tax treatment of common deductions and credi...
The federal government has announced the Employment Insurance (EI) premium rates which will be levied during 2020. For 2020, maximum insurable earnings for the year will be $54,200. The premium rate f...
The most recent release of Statistics Canada’s Labour Force Survey shows that there was no change in the overall unemployment rate for the month of October 2019, with that rate remaining at 5.5%. Am...
The Canada Revenue Agency has issued its Employer’s Guide: Payroll Deductions and Remittances for 2020 (T4001(E)). That guide provides employers with information on the deductions which must be made...
The federal government has announced the contribution rates and amounts and maximum pensionable earnings which will apply for purposes of the Canada Pension Plan in 2020. Employee and employer contrib...
Employers are required, by the end of February 2020, to issue T4 slips for their employees for the 2019 taxation year. Those T4s will summarize the amount of remuneration received by the employee duri...
In its regularly scheduled interest rate announcement made on October 30, 2019, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate will r...
As previously announced, changes are to be made to the Canada Pension Plan over the next 5 years, with the goal of increasing the amount of CPP retirement benefits available to contributors. The next ...
The federal government provides a detailed online retirement income calculator which can be used by taxpayers planning retirement. The online calculator allows users to input income amounts from vario...
The overall inflation rate was unchanged for the month of September, with that rate matching the 1.9% year-over-year increase posted for the month of August 2019. The greatest contributor to the infla...
The most recent release of Statistics Canada’s Labour Force Survey shows a sharp increase in job creation for the month of September. During that month employment rose by 54,000, mainly in full-time...
The Canada Revenue Agency (CRA) formerly provided taxpayers with a listing of prescribed interest rates for leasing, with such listing including the applicable rate for the upcoming month, as well as ...
The federal government has announced the Employment Insurance premium rates and amounts which will be levied during the 2020 calendar year. For 2020, the Employment Insurance premium rate is decreased...
The federal government has announced the Old Age Security (OAS) and related amounts which will be paid during the fourth quarter (October 1 to December 31) of 2019. OAS payments are indexed quarterly ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for 2019, as well as the rates that will apply for the purpose of calculating emp...
The Canada Revenue Agency (CRA) has updated and re-issued its publication on the conduct of tax audits. The updated publication (RC4188E)) outlines the process by which the CRA chooses a file for audi...
The Canada Revenue Agency (CRA) formerly provided taxpayers with a listing of prescribed interest rates for leasing, with such listing including the applicable rate for the upcoming month, as well as ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of August stood at 1.9%, as measured on a year-over-year basis. The inflation rate ...
Finance Canada has released the Annual Financial Report of the Government of Canada for 2018-19, which provides an overview of the federal government’s financial results for the 2018-19 fiscal year ...
Each September thousands of international students move to (or return to) Canada to attend Canadian secondary or post-secondary educational institutions. Depending on their residency status, those stu...
The most recent release of Statistics Canada’s Labour Force Survey shows that employment increased by 81,000 positions during the month of August 2019. Notwithstanding that increase, the unemploymen...
In its regularly scheduled interest rate announcement made on September 4, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remains at ...
Individual taxpayers who make quarterly instalment payments of tax must make the third such instalment payment for the year on or before September 15. As that date falls on a Sunday this year, payment...
The Bank of Canada has released a listing of the eight dates on which it will make regularly scheduled interest rate announcements during 2020. That listing is as follows: Wednesday, January 22 Wedne...
The Canada Revenue Agency has issued a Tax Tip warning owners of self-directed RRSPs about a current tax scheme which they may encounter. Promoters of such schemes falsely promise owners of self-direc...
The Canada Revenue Agency has updated and re-issued its Information Circular outlining the rules and requirements which apply to taxpayers who keep business and tax books and records in electronic for...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation recorded for the month of July was unchanged from the previous month. For both June and July, tha...
The Canada Revenue Agency (CRA) formerly provided taxpayers with a listing of prescribed interest rates for leasing, which includes the applicable rate for the upcoming month, as well as the rates in ...
The most recent release of Statistics Canada’s Labour Force Survey shows a slight increase in the unemployment rate for the month of July, as measured on a year-over-year basis. For that month, the ...
The Canada Revenue Agency (CRA) has issued a Tax Tip reminding taxpayers of the procedures which it utilizes to protect their personal information, particularly with respect to contacts between taxpay...
Individuals who are required to pay income tax by instalments must make their third quarterly instalment for 2019 on or before September 15, 2019. As that date is a Sunday, such payments are considere...
The federal government provides tax relief to livestock producers who are experiencing severe weather or climate conditions during the year. Such relief is provided through the livestock tax deferral ...
The Bank of Canada has released the listing of dates on which it will make scheduled interest rate announcements during calendar year 2020. There will be 8 such scheduled interest rate announcements d...
Prospective mortgage borrowers in Canada are subject to a “stress test” as part of the assessment of their credit-worthiness. Under that test, such borrowers are required to qualify for a mortgage...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation during the month of June 2019 stood at 2%. The comparable rate for May was 2.4%. The decr...
The Canada Revenue Agency (CRA) formerly provided taxpayers with a listing of prescribed interest rates for leasing, with such listing including the applicable rate for the upcoming month, as well as ...
The most recent release of Statistics Canada’s Labour Force Survey shows that, although the unemployment rate for the month of June rose by 0.1%, employment increased by 132,000 positions during the...
In its regularly scheduled interest rate announcement made on July 10, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the bank rate remains at 2%. ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first three quarters of 2019, as well as the rates that will apply for th...
July 1, 2019 is the start of the 2019-20 benefit year for many provincial and federal child and tax benefits, including the federal GST/HST credit and the Canada Child Benefit. As of that date, the pa...
The federal government has announced the Old Age Security (OAS) and related amounts which will be paid during the third quarter (July 1 to September 30) of 2019. OAS payments are indexed quarterly to ...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of July 2019. The prescribed rate for July is 2.75%. A chart showi...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of May 2019, as measured on a year-over-year basis, stood at 2.4%. Inflation during...
Under the Canadian tax system, employee stock options receive preferential tax treatment. In this year’s Budget the federal government indicated that, in its view, the existing rules on stock option...
In this year’s federal Budget, a new program was announced to benefit first-time home buyers. Under that program, the First-Time Home Buyer’s Incentive, the Canada Mortgage and Housing Corporation...
Effective as of July 2019, the amount of Canada Child Benefit (CCB) payable to eligible Canadian families will be increased to account for inflation. Starting with the July payment (which will be made...
The most recent release of Statistics Canada’s Labour Force Survey shows a small decline in the overall unemployment rate recorded for the month of May. The unemployment rate for that month stood at...
The Canada Revenue Agency (CRA) has announced the prescribed interest rates for leasing rules which will be in effect during the month of June 2019. The prescribed rate for that month will be increase...
Individual taxpayers who pay income tax by instalments must make their second instalment payment for 2019 on or before June 17, 2019. Such taxpayers will have received an instalment notice setting out...
Self-employed taxpayers (and their spouses) have until Monday June 17, 2019 to file their income tax returns for the 2018 tax year. Returns filed after that date will be subject to late-filing penalti...
In its regularly scheduled interest rate announcement made on May 29, the Bank of Canada indicated that, in its view, no change was needed to current interest rates. Consequently, the Bank Rate remain...
The federal government and many of the provinces provide benefit programs for which both entitlement and benefit amount are based, at least in part, on the income of the recipient taxpayer. Those bene...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of April stood at 2%, as measured on a year-over-year basis. Seven of the eight maj...
The Canada Revenue Agency (CRA) has issued a Tax Tip confirming that the filing deadline for individual income tax returns filed for the 2018 tax year by self-employed individuals and their spouses is...
The most recent release of Statistics Canada’s Labour Force Survey shows growth in employment during the month of April for nearly all demographic groups. The overall unemployment rate for the month...
The Canada Revenue Agency (CRA) has issued a warning about a current tax scheme involving Health Spending Accounts (HSAs) which are being marketed to small businesses. HSAs are self-insured health pla...
The federal government has announced that, effective with the July 2019 payment, Canada Child Benefit rates will increase.As of July, the maximum benefit for a child under the age of 6 will increase t...
The Canada Revenue Agency (CRA) has announced the prescribed interest rates for leasing rules which will be in effect during the month of May 2019. The prescribed rate for that month will be reduced t...
The Canada Revenue Agency (CRA) has issued a press release reminding taxpayers who have been affected by this spring’s floods of the availability of relief with respect to their obligation to file a...
The most recent release of Statistics Canada’s Consumer Price Index shows a significant increase in the rate of inflation recorded for the month of March 2019. During that month, the CPI rose 1.9%, ...
The Bank of Canada, in its regularly scheduled interest rate announcement made on April 24, determined that no change was needed to current rates. The Bank Rate therefore remains at 2%. The press rele...
The federal government has announced the Old Age Security payment rates which will be in effect for the second quarter (April 1 to June 30) of 2019. OAS payment rates are indexed quarterly to inflatio...
All payments of individual income tax owed for the 2018 taxation year must be received by the Canada Revenue Agency (CRA) on or before Tuesday April 30, 2019. There are a number of means by which paym...
The Canada Revenue Agency (CRA) has issued an updated guide to be used by taxpayers who are claiming medical expenses on their income tax returns for 2018. Individual taxpayers are entitled to claim a...
The most recent release of Statistics Canada’s Labour Force Survey indicates that there was no change in the overall unemployment rate for the month of March. That rate remained at 5.8%. Employment ...
The Canada Revenue Agency has announced the prescribed interest rates for leasing rules which will be in effect during the month April 2019. The prescribed rate for the upcoming month is 3.1%. A chart...
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2019, as well as the rates that will apply for the purpose of cal...
The Canada Revenue Agency (CRA) has posted a number of Tax Tips for seniors and students on its website. Those Tax Tips list and explain particular credits, deductions, or benefits which are most like...
The most recent release of Statistics Canada’s Consumer Price Survey indicates that the rate of inflation for the month of February, as measured on a year-over-year basis, stood at 1.5%. The compara...
Budget 2019 is proposing that the excise duty framework for cannabis products be amended to more effectively apply the excise duty on new classes of cannabis products, as well as to cannabis oils, whi...
Budget 2019 proposes to expand health-related tax relief under the Goods and Services Tax/Harmonized Sales Tax (GST/HST) system to better meet the health care needs of Canadians by: providing GST/HST...
Budget 2019 announces the Government’s intent to limit the use of the current employee stock option tax regime and move toward aligning the tax treatment with the United States for employees of larg...
Budget 2019 proposes that the Canada Revenue Agency (CRA) will be allowed to send requirements for information electronically to a bank or credit union only if the bank or credit union notifies the CR...
Budget 2019 proposes that the joint and several liability for tax owing on income from carrying on a business in a TFSA be extended to the TFSA holder. The joint and several liability of a trustee of ...
Budget 2019 proposes to introduce a new rule that would deny a mutual fund trust a deduction in respect of the portion of an allocation made to a unitholder on a redemption of a unit of the mutual fun...
Budget 2019 proposes to prohibit Individual Pension Plans (IPPs) from providing retirement benefits in respect of past years of employment that were pensionable service under a defined benefit plan of...
To bring the Specified Multi-Employer Plan (SMEP) rules in line with the pension tax provisions that apply to other defined benefit RPPs, Budget 2019 proposes to amend the tax rules to prohibit contri...
Amounts paid for cannabis products may be eligible for the medical expense tax credit where such products are purchased for a patient for medical purposes in accordance with the Access to Cannabis for...
A recent court decision related to the interpretation of “national importance” has created uncertainty about the availability of these tax incentives. Budget 2019 proposes to introduce legislative...
Budget 2019 proposes to amend the Income Tax Act to clarify that financial assistance payments received by care providers under a kinship care program are neither taxable nor included in income for th...
Budget 2019 proposes to amend the Income Tax Act to clarify that an individual may be considered to be the parent of a child in their care for the purpose of the Canada Workers Benefit, regardless of ...
To ensure that the Registered Disability Savings Plan (RDSP) continues to respond to the needs of Canadians with disabilities, Budget 2019 proposes two changes that will better protect the long-term s...
Budget 2019 proposes to amend the tax rules to permit PRPPs and defined contribution RPPs to provide a variable payment life annuity (VPLA) to members directly from the plan. A VPLA will provide payme...
Budget 2019 proposes to amend the tax rules to permit an advanced life deferred annuity (ALDA) to be a qualifying annuity purchase, or a qualified investment, under certain registered plans. An ALDA w...
To improve the consistency of the tax treatment of owners of multi-unit residential properties in comparison to owners of single-unit residential properties, Budget 2019 proposes to allow a taxpayer t...
Budget 2019 proposes to increase the Home Buyers’ Plan (HBP) withdrawal limit to $35,000. This would be available for withdrawals made after March 19, 2019. Budget 2019 also proposes to extend acces...
Budget 2019 proposes this new, non-taxable credit that would help Canadians pay for training fees. Every year, eligible workers between the ages of 25 and 64 would accumulate a credit balance of $250 ...
Budget 2019 proposes to: extend the foreign affiliate dumping rules in the Income Tax Act to prevent a corporation resident in Canada that is controlled by a non-resident individual or trust from red...
In Budget 2019, the Government proposes further amendments to the Income Tax Act to make the beneficial ownership information maintained by federally incorporated corporations more readily available t...
Budget 2019 proposes an amendment that introduces an additional qualification for the commercial transaction exception in the definition “derivative forward agreement” as the exception applies to ...
Budget 2019 proposes to add The Memorandum of Understanding between the Government of Canada and the Respective Governments of the Flemish, French and German-speaking Communities of the Kingdom of Bel...
Budget 2019 proposes to repeal the use of taxable income as a factor in determining a CCPC’s annual expenditure limit for the purpose of the enhanced SR&ED tax credit. As a result, small CCPCs w...
Budget 2019 proposes to eliminate the requirement that sales be to a farming or fishing cooperative corporation in order to be excluded from specified corporate income. As such, this exclusion will ap...
Budget 2019 proposes that these vehicles be eligible for a full tax write-off in the year they are put in use. Qualifying vehicles will include electric battery, plug-in hybrid (with a battery capacit...
Budget 2019 proposes to introduce three new tax measures to support Canadian journalism: allowing journalism organizations to register as qualified donees; a refundable labour tax credit for qualifyi...
The most recent release of Statistics Canada’s Labour Force survey shows that, while the rate of unemployment for the month of February was unchanged, employment grew by 56,000 positions. The unempl...
In its regularly scheduled interest rate announcement made on March 6, the Bank of Canada indicated that, in its view, no change was needed to current rates. Accordingly, the Bank Rate remains at 2% I...
The most recent release of Statistics Canada’s Consumer Price Index (CPI) shows a drop in the rate of inflation for the month of January. That rate, as measured on a year-over-year basis, was 1.4%. ...
The first instalment payment of individual income taxes for the 2019 tax year is due on or before Friday March 15, 2019. Individuals who have previously paid tax by instalments will have received an i...
The Canada Revenue Agency (CRA) has announced that its Individual Income Tax Enquiries line (1-800-959-8281) is now available for extended hours. Until April 30, 2019, telephone agents will be availab...
The Minister of Finance has announced that the 2019-20 federal Budget will be brought down on Tuesday, March 19, 2019. Once the Budget is released, at around 4 p.m., the Budget Papers will be posted o...
The 2018 T1 Individual Income Tax Return and Guide package is now available on the Canada Revenue Agency (CRA) website at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packag...
The Canada Revenue Agency (CRA) has announced that its NETFILE service for the filing of individual income tax returns is available as of Monday, February 18, 2019. The current NETFILE service (which ...
The Canada Revenue Agency (CRA) has issued a Tax Tip for post-secondary students and graduates who will be filing an income tax return for the 2018 tax year. That Tax Tip, which can be found on the CR...
During the month of January, the number of people employed in Canada rose by 67,000, with that figure attributable for most part to increased employment of those aged 15 to 24 and those working in the...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of March 2019. That prescribed rate for the month of March will be...
The Canada Revenue Agency (CRA) has posted a Tax Tip which lists the tax deductions and credits which are most relevant to seniors, and which can be claimed by eligible seniors when preparing and fili...
The Canada Revenue Agency (CRA) has announced that its NETFILE service for the filing of individual income tax returns for the 2018 tax year will be available online on Monday February 18, 2019. The N...
Effective as of February 11, 2019, the Canada Revenue Agency (CRA) will be merging its online mail and account alerts services. Notification of the change is being sent to users of those services, and...
Finance Canada has issued a reminder that the current consultation process with respect to the upcoming 2019-20 federal Budget will end on Tuesday, January 29, 2019. Interested stakeholders can make t...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation, as measured on a year-over-year basis, stood at 2% during the month of December 2018. The equiva...
Finance Canada has announced the automobile deduction limits and expense benefit rates which will apply to businesses and their employees during the 2019 taxation year. Most of the limits which applie...
In its regularly scheduled interest rate announcement made on January 9, 2019, the Bank of Canada indicated that no change would be made to current interest rates. The Bank Rate therefore remains at 2...
The Canada Revenue Agency (CRA) has announced the prescribed interest rates for leasing rules which will be in effect during the months of January and February 2019.The prescribed rate for January is ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first quarter of 2019, as well as the rates that will apply for the purpo...
Over the next seven years, significant changes will be made to the Canada Pension Plan. Those changes will result, overall, in an increase of about 50% in the maximum retirement benefit. The first suc...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of November, as measured on a year-over-year basis, stood at 1.7%. The comparable r...
Taxpayers who have not yet filed their individual income tax returns for 2017 (or the three prior years) can file those returns on NETFILE until Friday, January 25, 2019. Until that date, the Canada R...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of January 2019. The prescribed rate for that month will be 3.39%....
Where taxpayers fail to meet their tax filing or payment obligations, penalties and interest are usually levied for that failure. However, the Minister of National Revenue has the authority to forgive...
The most recent release of Statistics Canada’s Labour Force Survey shows that the unemployment rate for the month of November was the lowest recorded since 1976. The unemployment rate for the month,...
In its regularly scheduled interest rate announcement made on December 5, the Bank of Canada indicated that, in its view, no change to current interest rates was needed. Accordingly, the Bank Rate rem...
The federal government will provide the following personal tax credit amounts for 2019: Basic personal amount ……………………………… $12,069 Spouse or common law partner amount …...
The most recent release of Statistics Canada’s Consumer Price Index shows a slight increase in the rate of inflation rate for the month of October. That rate rose 2.4%, following a 2.2% increase for...
Finance Canada has announced details of the consultation process leading up the release of the 2019-20 Federal Budget next spring. The budget consultation process will include both in-person and digit...
In the 2018-19 Fall Economic Statement, the Minister of Finance announced that three new tax initiatives would be introduced to support both traditional and digital news organizations. Those changes w...
In the Fall Economic Statement issued on November 21, the Minister of Finance announced new tax measures that would: allow businesses to immediately write off the cost of machinery and equipment used...
Some of the non-monetary benefits which employers provide to their employees must be included in the employee’s income and taxed as such. Each year, employers must include the amount of any such tax...
The Canada Revenue Agency (CRA) provides a mobile web app for small business owners and sole proprietors which enables them to manage their business tax accounts on any browser-enabled mobile device. ...
The most recent release of Statistics Canada’s Labour Force Survey shows a small decline in unemployment during the month of September. That rate stood at 5.8%, down 0.1% from the rate posted for Au...
The Canada Revenue Agency has announced the contribution rates and amounts for the Canada Pension Plan which will apply during the 2019 calendar year, and that announcement can be found at https://www...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of November. The prescribed rate for that month will be 3.43%. A c...
The Canada Revenue Agency (CRA) (as well as other federal government departments and agencies) has issued information indicating how government payments will be handled during the current postal disru...
The most recent release of Statistics Canada’s Consumer Price Index shows that the inflation rate for the month of September stood at 2.2%, as measured on a year-over-year basis. The comparable rate...
In its regularly scheduled interest rate announcement made on October 24, the Bank of Canada once again increased the bank rate, which now stands at 2%.In the press release announcing the increase, wh...
The federal government has announced the maximum Old Age Security (OAS) benefit amount which will be paid to eligible recipients in the last quarter — October, November, and December — of 2018. Th...
In some circumstances, taxpayers are entitled to request a reduction in the amount of tax being deducted at source from their income. An employee can request that the amount of income tax being deduct...
A number of changes have been made over the past few years to the Canada Pension Plan (CPP), with those changes generally providing greater flexibility to CPP contributors. Some of those changes parti...
The most recent release of Statistics Canada’s Labour Force Survey shows a small decrease in the overall unemployment rate for the month of September. That rate decreased from the 6% rate recorded f...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of October. The prescribed rate for that month will be 3.33%. A ch...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the fourth quarter of 2018, as well as the rates that will apply for the purp...
While the deadline for filing of individual income tax returns for the 2017 tax year (for both employees and the self-employed) has passed, the Canada Revenue Agency’s (CRA’s) NETFILE service thro...
The most recent release of Statistics Canada’s Consumer Price Index shows that the rate of inflation for the month of August 2018 stood at 2.8%, as measured on a year-over-year basis. The comparable...
Canada’s tax system is one based on residency, and individuals who are considered to be residents of Canada are subject to federal and provincial tax. The federal government has issued a fact sheet ...
The Minister of Finance has announced that the employment insurance premium rate payable by employees and the self-employed for the 2019 tax year will be reduced. The premium rate for that year will b...
The federal government has updated and re-issued its guide to child benefits paid by the federal and several provincial governments. The updated guide (T4114), which is available on the Canada Revenue...
The most recent release of Statistics Canada’s Labour Force Survey shows a small increase in the unemployment rate posted for the month of August. That rate rose by 0.2%, from 5.8% to 6%. Most of th...
The Canada Revenue Agency (CRA) can provide interest and penalty relief to taxpayers who are unable to meet their tax filing or payment obligations due to circumstances beyond their control, including...
In its scheduled interest rate announcement made on September 5, the Bank indicated that no change would be made to current interest rates. Accordingly, the Bank Rate remains at 1.75%. The Bank acknow...
Each year the Canada Revenue Agency (CRA) sends a letter and questionnaire to approximately 350,000 taxpayers, seeking to determine whether such taxpayers are receiving the correct tax credits and ben...
The due date for the third instalment payment of 2018 income taxes by individuals falls on September 15, 2018. As that date is a Saturday, instalment payments will be considered to be made on time if ...
The federal government has announced that changes will be made to the administrative rules governing the extent to which charities can engage in non-partisan political activities. The intended amendme...
The most recent release of Statistics Canada’s Consumer Price Survey shows a significant increase in inflation for the month of July. That rate, as measured on a year-over-year basis, stood at 3%. T...
The most recent release of Statistics Canada’s Labour Force Survey indicates that the overall rate of unemployment was down slightly for the month of July. That rate stood at 5.8%, down by 0.2% from...
The Minister of Finance has announced that two major payment card networks have agreed to lower costs charged to small and medium-sized businesses. Both VISA and Mastercard have agreed to reduce domes...
The Canada Revenue Agency (CRA) prepares and posts on its website a number of podcasts and webinars covering tax and tax-related issues of particular interest to small businesses. There are currently ...
The Bank of Canada has issued a listing of the dates on which it will make announcements during the 2019 calendar year with respect to current interest rates. There are eight such interest rate announ...
The Canada Mortgage and Housing Corporation (CMHC) has announced that, effective as of October 1, 2018, changes will be made to the process by which self-employed taxpayers are assessed for mortgage f...
The Canada Revenue Agency (CRA) has updated and re-issued its Form RC366, which allows businesses to have amounts owed to them deposited directly to a bank account. The updated form can be used to eit...
The Canada Revenue Agency (CRA) has updated and re-issued its publication RC4092(E) on Registered Education Savings Plans. The updated publication incorporates changes, originally announced as part of...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of June, as measured on a year-over-year basis, stood at 2.5%. That change ...
The Canada Revenue Agency (CRA) has announced the prescribed interest rates for leasing rules which will apply during the months of July and August 2018. Those prescribed rates will be 3.28% for July ...
The Canada Revenue Agency has updated and re-issued its publication outlining the tax treatment of funds held in a RRIF on the death of the RRIF annuitant. The updated publication (RC4178(E)) also rev...
While employment rose by 32,000 during the month of June, the unemployment rate was also up, by 0.2%, a result attributed by Statistics Canada an increase in the number of individuals seeking to enter...
In its regularly scheduled interest rate announcement made on July 11, the Bank of Canada indicated that it was increasing its benchmark interest rate by one-quarter of a percentage point. Accordingly...
Each year, the Canada Revenue Agency reviews approximately 3 million returns which have already been filed and assessed. Generally, such reviews are carried out to confirm income amounts reported, and...
Old Age Security (“OAS”) benefits received by Canadians are indexed to changes in the overall Consumer Price Index, and are adjusted each quarter to reflect increases in that Index.The federal gov...
The most recent release of Statistics Canada’s Consumer Price Index indicates the rate of inflation for the month of May stood at 2.2%. The same rate was recorded for the month of April, and both ra...
The Canada Revenue Agency (CRA) has re-issued the payroll deductions online calculator to be used by employers in calculating employee source deductions as of July 1, 2018. The updated version of that...
The Canada Revenue Agency (CRA) has announced the prescribed interest rate for leasing rules which will be in effect during the month of July. The prescribed rate for that month will be 3.28%. A chart...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the third quarter of 2018, as well as the rates that will apply for the purpo...
The Canada Revenue Agency has updated and re-issued its standard form for filing an objection to a Notice of Assessment or Reassessment. The 2018 T-400A E, Notice of Objection, can be found on the CRA...
The most recent release of Statistics Canada’s Labour Force Survey shows little change in unemployment during the month of May. For the fourth consecutive month, that rate stood at 5.8%. There was s...
The filing deadline for individual income tax returns for the 2017 year for self-employed individuals and their spouses is midnight Friday June 15, 2018. Returns can be filed using the Canada Revenue ...
For Canadians who make quarterly instalment payments of personal income tax, the next due date for such payment is Friday June 15, 2018. The Canada Revenue Agency has posted a notice on its website in...
The Canada Revenue Agency (CRA) has issued a reminder to taxpayers who have been affected by this spring’s floods of the availability of administrative tax relief. Under the federal government’s T...
In its regularly scheduled interest rate announcement made on May 30, the Bank of Canada indicated that, in its view, no change was needed to current interest rates. Accordingly, the Bank Rate remains...
The Canada Revenue Agency (CRA) has issued updated payroll deduction formulas for use by employers for payroll periods beginning after July 1, 2018. The updated formulas reflect changes in provincial ...
The most recent release of Statistics Canada’s Consumer Price Index shows that the overall rate of inflation for the month of April stood at 2.2%, as measured on a year-over-year basis. The rate for...
The Canada Revenue Agency (CRA) will be making changes to its distribution method for GST/HST reporting and remittance forms for small businesses, with those changes generally directed toward reducing...
The most recent release of Statistics Canada’s Labour Force Survey indicates that there was no change during the month of April to either employment figures or the overall unemployment rate. That un...
The Canada Revenue Agency prepares and posts podcasts on a number of different tax topics, both individual and corporate. Those podcasts are available for download from the CRA website. The current se...
The Canada Revenue Agency has announced the prescribed interest rates for leasing rules which will be in effect during the months of May and June 2018. Those prescribed rates will be 3.22% during the ...
Taxpayers who have filed their return for the 2017 tax year and are expecting to receive a refund can track the status of that refund payment through a toll-free telephone line. That line, the CRA’s...
The Canada Revenue Agency (CRA) has issued a warning to taxpayers of the need to be particularly vigilant with respect to fraudulent text, telephone, and e-mail communications, which increase during t...
The most recent release of Statistics Canada’s Consumer Price Index indicates that the rate of inflation stood at 2.3% during the month of March 2018, as measured on a year-over-year basis. The year...
The Canada Revenue Agency (CRA) has issued a reminder that all individual income tax balances owed for the 2017 tax year must be paid on or before Monday April 30, 2018. April 30 is also the deadline ...
The most recent release of Statistics Canada’s Labour Force Survey shows that the rate of unemployment for the month of March 2018 stood at 5.8%. The same rate was recorded for February 2018. Employ...
In its regularly scheduled interest rate announcement made on April 18, the Bank of Canada indicated that no change was required to current interest rates. Accordingly, the Bank Rate will remain at 1....
It is not uncommon for taxpayers to discover an error or omission in an already-filed return, and the usual means by which such error can be corrected is the filing of a T1-Adjustment form. While a co...
The Canada Revenue Agency (CRA) has issued a reminder to taxpayers who receive income from the “sharing economy” that such income is taxable and must be reported on the annual tax return. Although...
The Bank of Canada’s regularly scheduled interest rate announcement dates for the remainder of calendar year 2018 are as follows: April 18, 2018; May 30, 2018; July 11, 2018; September 5, 201...
Proceeds received from the sale of one’s principal residence are, in most circumstances, not taxable, as such sales are eligible for the principal residence exemption. However, as of the 2016 tax ye...
The most recent release of Statistics Canada’s Consumer Price Index shows a sharp increase in inflation for the month of February. That rate stood at 2.2%, while the rate for January 2018 was 1.7%. ...
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the CRA for the second quarter of 2018, as well as the rates that will apply for the purpose...
While taxpayers fall victim to tax scams year-round, such scams are more prevalent during and just following tax filing season. During that time, taxpayers expect to hear from the tax authorities, a...
In December 2017, the Canada Revenue Agency (CRA) announced that substantive changes would be made to the Agency’s Voluntary Disclosure Program (VDP). That program enables taxpayers who are in defau...
The Canada Revenue Agency has issued its Guide RC4018, Electronic Filers Manual for 2017 Income Tax and Benefit Returns. That guide is for use by certified e-filers in filing individual income tax ret...
The most recent release of Statistics Canada’s Labour Force Survey shows a small decline in the overall unemployment rate for the month of February 2018. That rate declined from 5.9% in the month of...
The most recent release of Statistics Canada’s Consumer Price Index indicates that the rate of inflation for the month of January 2018 stood at 1.7%. The rate for the previous month was 1.9%. Inflat...
In its regularly scheduled interest rate announcement made on March 7, the Bank of Canada indicated that no change would be made to current interest rates. Accordingly, the bank rate remains at 1.5%. ...
Budget 2018: No personal tax credits have been repealed, and there are no new personal tax rate changes....
Budget 2018: Foreign-born Status Indians may now be eligible for child benefits, retroactive to 2005....
Budget 2018: Eligibility of specially trained service animals will be expanded for the purposes of the medical expense tax credit....
Budget 2018: Taxpayers will no longer need to apply when filing their return in order to receive the Canada Workers Benefit....
Budget 2018: The Working Income Tax Benefit amounts are enhanced as of 2019, and the credit is renamed the Canada Workers Benefit...
Budget 2018: The non-resident surplus stripping rules are tightened to address the use of partnerships and trusts....
Budget 2018: Where a CRA compliance order or information requirement is contested, a new rule will “stop the clock” to prevent the tax year from being statute barred....
Budget 2018: A corporation will have two RDTOH accounts going forward: eligible and non-eligible RDTOH....
Budget 2018: A corporation with $100,000 of investment income will have its small business limit reduced to $250,000....
Budget 2018: A corporation’s small business limit will be reduced where the corporation earns investment income exceeding $50,000....
The Canada Revenue Agency (CRA) provides a 1-800 telephone service to provide tax information to Canadian taxpayers. Such information can be general in nature, or can involve the specific tax affairs ...
The Canada Revenue Agency’s NETFILE service for filing of individual income tax returns will be available starting Monday February 26, 2018. Taxpayers do not need to obtain an access code to file th...
The most recent release of Statistics Canada’s Labor Force Survey shows a slight increase in the overall unemployment rate for the month of January. That rate rose by 0.1%, from 5.8% to 5.9%. That c...
The Federal Minister of Finance has announced that the 2018-19 federal Budget will be brought down on Tuesday, February 27, 2018. The Budget will be released at around 4 p.m. and the full Budget Paper...
This year, the Canada Revenue Agency (CRA) will be providing taxpayers with hard copies of the 2017 Income Tax and Benefit package through a variety of means, and at various dates. Individuals who pap...
The Canada Revenue Agency (CRA) has announced the date on which NETFILE service for the filing of individual income tax returns for the 2017 tax year will be available. NETFILE service will be availab...
While the majority of Canadians now file their individual income tax returns electronically, there is still a significant minority of tax filers who file using a printed return. The Canada Revenue Age...
The Canada Revenue Agency (CRA) has posted a notice on its website that an “update” has been made to individual 2017 tax forms. Those forms are to be used by individual Canadians to file their ret...
For a number of years, taxpayers whose tax situation was relatively straightforward were able to file their return by telephone. That service, which was called TELEFILE, was withdrawn a few years ago....
The Canada Revenue Agency (CRA) has announced the interest rates which will apply to amounts owed to and by the Agency for the first quarter of 2018, as well as the rates that will apply for the purpo...
As widely expected, the Bank of Canada indicated, in its regularly scheduled interest rate announcement made on January 17, that an increase in the bank rate was required. The Bank’s announcement, w...
Finance Canada has announced that the consultation process leading to the release of the 2018-19 federal Budget will conclude on Friday January 26, 2018. Canadians can provide input by submitting thei...
The Canada Revenue Agency has released the T1 Individual Income Tax Return and Benefit form to be used by individual Canadian taxpayers in filing their return for the 2017 tax year. The T1 form is ava...
The most recent release of Statistics Canada’s Labour Force Survey indicates that the unemployment rate for the month of December 2017 stood at 5.7%. The last period for which that rate was recorded...
As previously announced, the federal small business tax rate is reduced to 10.0%, effective as of January 1, 2018. There is no change in the federal small business limit, which remains at $500,000. Th...
Finance Canada has announced the limits and thresholds which will apply for purposes of determining automobile benefits and deductions during 2018. Most such deduction limits and thresholds are unchan...
Planned changes to the federal income tax rules governing the taxation of small incorporated Canadian businesses are to take effect for 2018. One of those changes will include greater restrictions on ...
The Canada Revenue Agency (CRA) provides an administrative program under which taxpayers who have failed to file returns or pay taxes on a timely basis can bring their tax affairs into compliance, usu...
Taxpayers who are turning age 71 during the year and who have available contribution room are entitled to make a final RRSP contribution for that year. Such contributions must be made by the end of th...
Taxpayers who have not yet filed their return for the 2016 tax year will have until January 19, 2018 to file that return using NETFILE. Until that date, returns for the 2013, 2014, 2015, and 2016 tax ...
In its regularly scheduled interest rate announcement made on December 6, the Bank of Canada indicated that, in its view, no change is required to current rates. Accordingly, the bank rate remains at ...
The most recent release of Statistic’s Canada’s Labour Force Survey shows a slight decline in the overall unemployment for the month of November. That rate declined by 0.4%, to 5.9%. The November ...
The Canada Revenue Agency has issued the 2018 version of its publication T4127(E), Payroll Deductions Formulas. The guide is intended for use by payroll software providers and by employers which manag...
The Canada Revenue Agency has issued the federal TD1 Form and Worksheet which will be used by taxpayers and their employers to determine required federal income tax source deductions for the upcoming ...
The most recent release of Statistics Canada’s Consumer Price Index (CPI) shows an inflation rate of 1.4% for the month of October, as measured on a year-over-year basis. The equivalent rate for the...
Finance Canada has begun the consultation process leading to the release of the 2018-19 federal Budget. As part of that budget consultation process, the Minister of Finance is holding in-person public...
Effective as of January 8, 2018, administrators and representatives of qualifying Canadian trusts will be able to file trust income tax and information returns online, through the Canada Revenue Agenc...
The federal government has announced the premium rates and maximum insurable earnings amount which will be in place for the 2018 calendar year. The premium rate for the year for employees has been set...
The Canada Revenue Agency (CRA) has announced the contribution rates and amounts for both employers and employees which will apply for 2018. Maximum pensionable earnings for the year will be $55,900 (...
In the 2024 Economic Outlook and Fiscal Review released on October 30, the Ontario Minister of Finance announced an improved deficit forecast for the province’s current (2024-25) fiscal year, which ...
The Ontario government has indicated that the measures to be announced as part of the province’s upcoming 2024-25 Fall Economic Statement will include the extension of the current 5.7 cent-per-litre...
The Ontario government has announced the date on which the Fall Economic Statement for the province’s 2024-25 fiscal year will be released. That Economic Statement will be delivered by the Ontario M...
Ontario Finance provides a series of webinars covering various tax topics affecting individuals living in the province. The topics currently covered by those webinars include Ontario personal income t...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
Effective October 1, 2024 (and until September 30, 2025), the Ontario general minimum wage will increase from $16.55 to $17.20 per hour. The change is based on increases in the province’s Consumer P...
The Ontario government has released the final revenue, expenditure, and deficit figures for the province’s 2023-24 fiscal year, which ended on March 31, 2024. The Ontario government recorded a $0.6 ...
The Ontario government has released the figures summarizing the province’s fiscal position at the end of the first quarter (April 1 to June 30) of its 2024-25 fiscal year. The 2024-25 First Quarter ...
Effective as of October 1, 2024, the Ontario general minimum wage will increase by 65 cents per hour, from $16.55 to $17.20 per hour. That increase in the general minimum wage is tied to changes in th...
Most rental accommodation in Ontario is subject to rent control guidelines, which limit the amount by which rent charged can increase from one year to the next. The Ontario government has announced th...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The benefit year for Ontario’s refundable tax credit and benefit programs runs from July 1 to June 30. Consequently, a new benefit year will begin July 1, 2024, and benefits payable under such progr...
The Ontario government has announced that it will be implementing a series of measures intended to provide additional protection to homebuyers in the province. One of those measures will be the introd...
Ontario farmers (individuals or corporations) that donate agricultural products (defined as anything intended for human consumption that is grown, raised, or harvested on a farm) to eligible community...
The Ontario government provides an 18% refundable tax credit – the Ontario Computer Animation and Special Effects (OCASE) tax credit – for corporations which undertake computer animation and speci...
The government of Ontario has announced that the province’s general minimum wage will increase, effective as of October 1, 2024. On that date, the minimum wage will increase from $16.55 to $17.20 pe...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
In 2022, the Ontario government announced a temporary reduction in the rate of both gasoline tax and fuel (diesel) tax by, respectively, 5.7 cents and 5.3 cents per litre. Following the reduction, the...
The Ontario Ministry of Finance provides an ongoing series of webinars on different aspects of the province’s tax system, including sessions on Ontario tax credits and benefits, the tax credits, ben...
Ontario’s budget for the upcoming 2024-25 (April 1, 2024 to March 31, 2025) fiscal year will be released on Tuesday March 26, 2024. Once the budget measures are announced, the full budget papers wil...
The2023-24 Third Quarter Finances report released by the Minister of Finance on February 12projects a deficit of $4.5 billion for the full 2023-24 fiscal year which ends on March 31, 2024. While that...
During the 2024 taxation year the province of Ontario will levy individual income tax using the following income brackets and tax rates. Tax Rate Taxable Income Brackets 5.05% ...
Canadian taxpayers are entitled to claim a non-refundable tax credit (for both federal and provincial purposes) for qualifying medical expenses incurred. The province of Ontario also provides a refund...
The province of Ontario will provide the following personal tax credit amounts for 2024: Basic personal amount ……………………………… $12,399 Spouse or equivalent-to-spouse amount … ...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The Canada Revenue Agency (CRA) has issued the Employer Guide to Payroll Deductions and Remittances (T4001(E) Rev. 23) to be used by Ontario employers in determining what source deductions are to be m...
The province of Ontario provides an Ontario Production Services Tax Credit (OPSTC), a refundable tax credit based on Ontario labour and other qualifying production expenditures incurred by a qualifyin...
The province provides a refundable Ontario Film and Television Tax Credit (OFTTC), which is based upon eligible Ontario labour expenditures incurred by a qualifying production company with respect to ...
The Ontario government currently provides a rebate of the provincial portion of the harmonized sales tax (“HST”) paid on certain purchases of a newly constructed or substantially renovated reside...
In the Ontario Economic Outlook and Fiscal Review released on November 2, the Ontario government announced that the deficit for the current (2023-24) fiscal year is projected to be $5.6 billion. That ...
The Ontario government has announced that the fuel tax relief measures which were scheduled to end as of December 31, 2023 will instead be extended for a further six months, until June 30, 2024. Those...
The Ontario government has announced that the Fall Economic Statement for the 2023-24 fiscal year will be provided by the Minister of Finance on Thursday November 2, 2023. Once the measures in the Sta...
Corporations in Ontario are subject to provincial corporate income tax, and are entitled to file a Notice of Objection with respect to any assessment of such tax with which they disagree. That Notice ...
Ontario levies an Estate Administration Tax (EAT) on estates for which an estate certificate (formerly known as letters probate) is applied for and issued. The amount of tax payable is based on the mo...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
Effective as of Sunday October 1, 2023, the provincial general minimum wage will increase by $1.05, from $15.50 to $16.55 per hour. The increase in the minimum wage is tied to changes in Ontario’s C...
Since 2010, Ontario residents have paid a harmonized sales tax (HST) on the purchase of most goods and services in the province. That harmonized sales tax, which combines the federal goods and service...
The Ontario government has updated its Notice outlining the province’s Non-Resident Speculation Tax. That tax is imposed at a rate of 25% (effective as of October 25, 2022) of the sale price of purc...
The Ontario Minister of Finance has issued a report outlining the province’s fiscal performance for the first quarter (April 1 – June 30, 2023) of the 2023-24 fiscal year. The fiscal figures conta...
Eligible residents of Ontario can receive four quarterly payments during the 2023-24 benefit year under the federal Climate Action Incentive Payment program. For the 2023-24 benefit year, eligible res...
The Ontario government has announced that the province’s minimum wage will increase, effective as of October 1, 2023, with the increase tied to the Ontario Consumer Price Index for 2023. As of Octob...
The Canada Revenue Agency (CRA) and the Ontario Workplace Safety and Insurance Board (WSIB) have announced that, effective as of July 4, 2023, Ontario businesses which have a business number can repor...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
Producers of eligible film and television productions in Ontario can claim the Ontario Film and Television Tax Credit (OFTTC), a refundable tax credit which is generally equal to 35% of eligible Ontar...
Through its Energy Affordability Program, the province of Ontario provides a number of energy efficiency upgrades free of charge to residents of the province who meet specified eligibility criteria. T...
The Ontario government has announced that, effective as of October 1, 2023, the general minimum wage payable in the province will increase by $1.05, from $15.50 to $16.55 per hour. The increase is bas...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
In its recent budget for the province’s 2023-24 fiscal year, the Ontario government introduced a new Ontario Made Manufacturing Investment Tax Credit for capital investments made in buildings, machi...
The Ontario Ministry of Finance has posted on its website an updated publication outlining details of the Ontario tax on sales of beer and wine in the province. The updated information, which is avail...
The Ontario Minister of Finance has announced that Ontario’s budget for its 2023-24 fiscal year will be brought down on Thursday March 23, 2023. Once the budget measures are announced, the full 2023...
The Ontario government has released its report on the province’s finances for the Third Quarter (October to December 2022) of its 2022-23 fiscal year. Overall, the provincial government is projectin...
During the 2023 taxation year the province of Ontario will levy individual income tax using the following income brackets and tax rates. Tax Rate Taxable Income Brackets 5.05% ...
The province of Ontario will provide the following personal tax credit amounts for 2023: Basic personal amount ……………………………… $11,865 Spouse or equivalent to spouse amount …...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The Canada Revenue Agency has released the payroll deduction formulas to be used by Ontario employers during the 2023 tax year. The Guide to Payroll Deductions outlines the amounts which Ontario emplo...
The Ontario Ministry of Finance has updated its online guide to the province’s gasoline tax. The updated guide reviews the types of gasoline products subject to the tax and the tax rates imposed on ...
Earlier this year the Ontario government announced a temporary holiday from provincial taxes imposed on the sale of gasoline and fuel. That holiday, which cut the gas tax by 5.7 cents per litre and th...
The Ontario Minister of Finance has announced that the Fall Economic Statement for the 2022-23 fiscal year will be released on Monday November 14, 2022. The Statement will include updated information ...
The province of Ontario levies a Non-Resident Speculation Tax on the price of homes purchased in Ontario by foreign nationals (individuals who are not citizens or permanent residents of Canada), forei...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The government of Ontario has released the final Public Accounts for its 2021-22 fiscal year which ended on March 31, 2022, and the results are better than expected. The final figures show that, for 2...
The provincial government has announced that the general provincial minimum wage will increase, effective as of October 1, 2022, by 50 cents per hour. That increase, which is based on changes to the O...
Ontario residents who are 70 years of age or older by the end of 2022 can claim a new Seniors Care at Home Tax Credit on their return for the 2022 tax year. Expenditures which qualify for the existing...
The province of Ontario provides a refundable tax credit – the Regional Opportunities Investment Tax Credit - to Canadian-controlled private corporations which make qualifying investments in specifi...
The Ontario government has released details of the province’s fiscal position at the end of the first quarter of the 2022-23 fiscal year (June 30, 2022). The government summary indicates that it is ...
Effective as of October 1, 2022, the general minimum wage payable in Ontario will increase from $15.00 to $15.50 per hour, to reflect changes to the Ontario Consumer Price Index for 2022. Different mi...
The province of Ontario levies an Estate Administration Tax (EAT) when the executor of an estate applies for an Estate Administration Certification (formerly known as letters of probate or letters of ...
As part of its pandemic response measures, the provincial government provided businesses with a tax penalty and interest relief period. While all tax filing and payment deadlines were unchanged, penal...
The Ontario government provides a number of refundable tax credits which are claimed on the annual tax return and paid on a monthly basis throughout the year. The benefit year for such credits runs fr...
As part of its pandemic relief measures, the government of Ontario suspended the imposition of interest and penalty charges for late filings and late or insufficient remittances of tax by Ontario busi...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
Earlier this year, the provincial government announced that, to provide some relief from high gas prices, provincial gas and fuel taxes would be temporarily reduced. That tax reduction will take effec...
Under two existing programs, Ontario provides tax credits to the film and television production industry. As part of this year’s budget, the provincial government announced that eligibility for thos...
Ontario residents will see some relief from high gas prices beginning July 1, when provincial taxes on gas and fuel are reduced for a six-month period ending December 31, 2022. As of July 1, 2022, the...
As announced in this year’s budget, the province will, beginning with the 2022 tax year, be providing a refundable tax credit to help seniors with eligible medical expenses, including expenses that ...
The 2022-23 Ontario budget was announced by the Minister of Finance on April 28, 2022. That budget projects a deficit of $19.9 billion for the current (2022-23) fiscal year. Projections contained in t...
The provincial government has announced that the gasoline tax will be reduced by 5.7 cents per litre, effective as of July 1, 2022. As of the same date, the provincial fuel tax will be reduced by 5.3 ...
Since 2017, a 15% non-resident speculation tax (NRST) has been levied by the province on purchases of residential property located in the Greater Golden Horseshoe Region (GGH) of Ontario, by individua...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The federal government has released information on Climate Action Incentive (CAI) payment amounts for 2022-23. For residents of Ontario, those amounts will be $373 for the first adult in a family, $18...
In its announcement of this year’s budget consultation process, the Ontario government indicated that, as required by provincial law, the 2022–23 provincial budget would be brought down before Mar...
The Ontario government has issued a reminder to residents of the province that a refundable tax credit may be claimed for expenses incurred for eligible accommodation during 2022 at hotels, motels, lo...
The Seniors’ Home Safety Tax Credit is a refundable credit of 25% of up to $10,000 per household in eligible expenses, to a maximum credit of $2,500. The credit is provided for eligible home renovat...
The province of Ontario will provide the following personal tax credit amounts for 2022: Basic personal amount ……………………………… $11,141 Spouse or equivalent to spouse amount …...
The province of Ontario has issued the revenue, expenditure, and deficit projection figures for the third quarter (October to December 2021) of its 2021-22 fiscal year. Overall, the fiscal picture was...
In January, the provincial government announced the launch of its virtual budget consultation process leading to the release of the Ontario Budget for 2022-23. That Budget will be brought down by the ...
As part of its pandemic relief measures, the Ontario government is providing a Small Business Relief Grant for small businesses that are subject to closure under the public health orders issued on Jan...
The Ontario government recently announced that, as part of pandemic relief measures, eligible businesses in the province could receive a rebate of property tax and energy costs incurred during partial...
The province has launched the virtual consultation process leading to the release of Ontario’s 2022-23 Budget by the end of March 2022. The Budget consultation process begins on January 17 and will ...
The Ontario government has announced that small businesses in the province will be provided with a six-month interest-free and penalty-free period with respect to late or insufficient payments of most...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The Canada Revenue Agency (CRA) has issued the TD1 form to be used by residents of Ontario for the 2022 tax year. On the TD1 form, an employee indicates the provincial personal tax credit amounts for ...
In its recent Economic Outlook and Fiscal Review, the province announced that the existing Jobs Training Tax Credit would be extended to be available throughout 2022. The credit provides eligible Onta...
In its recent Economic Outlook and Fiscal Review, the province announced that the existing Seniors’ Home Safety Tax Credit would be extended to be available until the end of 2022. That Credit was sc...
In the 2021 Ontario Economic Outlook and Fiscal Review released on November 4, 2021, the province introduced a new, temporary Ontario Staycation Tax Credit. The refundable credit, which is available f...
The Ontario government has announced that, effective as of January 1, 2022, the provincial general minimum wage will increase from $14.35 per hour to $15 per hour. As of the same date, the lower liquo...
Effective as of October 1, 2021, the general minimum wage payable in the province increased by 10 cents, from $14.25 to $14.35 per hour. The minimum wage increase is based on year-over-year changes in...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
In March of 2020, as part of its pandemic response, the government of Ontario announced that it was suspending the requirement that individuals renew their driver’s licences, health cards, and vehic...
The province has announced that, beginning on October 19, 2021, the Ontario Business Registry will be brought online. That registry will enable Ontario businesses to effect online a significant number...
The Ontario government has released details of the province’s financial position at the end of the first quarter (April 1 to June 30) of the 2021-22 fiscal year. The update is the first issued since...
Effective as of October 1, 2021, the Ontario general minimum wage will increase by 10 cents, from $14.25 to $14.35 per hour. Increases to the minimum wage are based on changes to the province’s Cons...
The provincial government has announced that eligible Ontario small business may receive a $2,500 Digital Transformation Grant. The grant can be used to purchase new technology and digital services, t...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The government of Ontario has announced that, for the 2022 calendar year, the general rent increase guideline for residential rental premises will be 1.2%. That guideline is based on year-over-year ch...
The Ontario government has announced that the tuition freeze for universities and colleges which was implemented last year will be extended through the 2021-22 academic year. The announcement of the e...
The Ontario Regional Opportunities Investment Tax Credit is a 10% refundable tax credit available to Canadian-controlled private corporations that make qualifying investments in eligible geographic ar...
As part of its 2021-22 Budget, the Ontario government announced a temporary increase in the support provided by the Childcare Access and Relief from Expenses (CARE) tax credit for 2021. That credit pr...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
This year’s Ontario Budget included an announcement of a new jobs training tax credit for Ontario residents. The refundable credit, which is available only for the 2021 tax year, is equal to 50% of ...
As part of its pandemic response, the Ontario government provided small businesses in the province with a grant program — the Ontario Small Business Support Grant. That grant provided direct payment...
The Ontario government has announced that the province’s Budget for the upcoming 2021-22 fiscal year will be brought down on Wednesday March 24, 2021. When the Budget is released, the budget papers ...
The provincial government has released the revenue, expenditure, and projected deficit figures for the third quarter (October 1 – December 31) of the 2020-21 fiscal year. Based on those figures, the...
The province of Ontario provides a grant of between $10,000 and $20,000 for eligible small businesses which were affected by the province-wide shutdown which began on December 26, 2020. The applicatio...
The Ontario government has launched its consultation process with respect to the upcoming 2021-22 provincial Budget. That Budget will be brought down by March 31, 2021. The Budget consultation process...
During the 2021 taxation year the province of Ontario will levy individual income tax using the following income brackets and tax rates. Tax Rate ...
The province of Ontario will provide the following personal tax amounts for 2021. Basic personal amount ………………………………… $10,880 Spouse or common law partner amount …… $9,...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
The province of Ontario provides a number of tax credits for companies in the film, television, and digital media industries. Those credits included the Film and Television Tax Credit, the Ontario Pro...
In the Economic Statement announced in March 2020, the provincial government announced that a number of filing deadlines relating to provincial corporate tax credits would be extended. One of the affe...
In early November the Ontario government announced that a subsidy would be provided to families with children up to age of 12 (or age 21 in the case of children with special needs).The purpose of the ...
Ontario taxpayers who disagree with an assessment of their tax liability under a range of provincial tax programs are entitled to object to that assessment. The Ontario government has updated and re-i...
The Employer Health Tax (EHT) is a payroll tax paid by employers based on their total annual Ontario remuneration in excess of a remuneration threshold. The EHT has a top rate of 1.95%. In March 2020 ...
In the 2020-21 Budget brought down on November 5, the government of Ontario projected a deficit of $38.5 billion for the current fiscal year. That deficit amount is unchanged from the figure projected...
In the 2020 Budget brought down on November 5, the province introduced a new refundable tax credit for seniors. That credit will be claimable by senior homeowners, renters, or people who live with rel...
The Ontario government has announced that the 2020-21 provincial Budget will be brought down on Thursday November 5, 2020. In the announcement of the Budget date, which is available on the provincial ...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each quarter of the calendar year. The rates presc...
Ontario has released the province’s final fiscal results for the fiscal year ended March 31, 2020. The 2019-20 Public Accounts compare those final fiscal results with the figures projected in the 20...
The Ontario government has announced that a rent freeze will be imposed for the 2021 calendar year for most residential rental accommodation in the province. While Ontario already has rent control leg...
As part of its pandemic response measures, the Ontario government provided businesses with relief from penalties and interest charges related to late filings or remittances, for a six-month period. Th...
Under Ontario labour laws, where a non-unionized employee is laid off for more than 13 weeks, said layoff can trigger termination and severance payment obligations for the employer. However, earlier...
The Canada Revenue Agency (CRA) has issued a warning to taxpayers of a current tax scam relating to claims for Ontario tax benefits — specifically, claims for the Ontario Senior Homeowners Property ...
On October 1, 2020, the Ontario general minimum wage will increase by 25 cents, to $14.25 per hour. That increase is based on changes to the Ontario Consumer Price Index. Different minimum wage rates ...
In March 2020, the Ontario government announced that, as part of its pandemic response plan, it would provide an interest and penalty relief period for Ontario taxpayers with respect to specific tax p...
The provincial government has announced that its commercial rent assistance program — Canada Emergency Commercial Rent Assistance (CECRA) — has been extended to be available until the end of Augus...
In March 2020 the provincial government announced that, as part of its pandemic response plan, a five-month interest and penalty relief period would be provided to Ontario businesses which failed to f...
The provincial government has announced that it will be moving to impose limits on the rate of interest and certain fees which can be levied by payday loan companies. The proposed changes would cap th...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute at the beginning of each calendar quarter. The rates set for the third quarter...
Applications can now be made by commercial landlords in Ontario for forgivable loans to assist with pandemic-related losses of rental income. Under the Canada Emergency Commercial Rent Assistance (CEC...
As part of its pandemic response plan, the province is providing interest relief and payment deferrals on existing Ontario Student Assistance Program (OSAP) loans. Under that plan, OSAP borrowers will...
The Ontario government will be providing forgivable loans to eligible commercial property owners in the province who are experiencing rent shortfalls due to the pandemic, through the new Ontario-Canad...
As part of its recent Economic and Fiscal Update, the province announced that interest and penalty relief would be provided to Ontario businesses with respect to their obligations under specified tax ...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
Ontario imposes an Employer Health (payroll) Tax which is levied on employers having an annual payroll over $490,000. As part of the tax relief measures announced in the recent Economic and Fiscal Up...
In the Economic and Fiscal Update brought down on March 25 Ontario’s Minister of Finance announced that, beginning April 1, 2020, penalties and interest will not be imposed on Ontario businesses tha...
The Ontario government had announced that the province’s 2020-21 Budget would be brought down on March 25, 2020. The Ontario Minister of Finance has indicated that, in light of recent developments, ...
The Ontario government has announced that the province’s Budget for the upcoming (2020-21) fiscal year will be brought down on Wednesday March 25, 2020. Once the Budget is released, the Budget paper...
The Ontario Ministry of Finance has announced the province’s financial results for the third quarter (October to December 2019) of its 2019-20 fiscal year. As of December 31, 2019, the government is...
The Canada Revenue Agency (CRA) has released the Individual Income Tax Return and Guide to be used by individuals who were residents of Ontario as of December 31, 2019. That return and guide can be fo...
The corporate income tax rate levied on active business income of eligible Ontario corporations was reduced to 3.2%, effective as of January 1, 2020. The rate change will be pro-rated for non-calendar...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The province of Ontario will provide the following personal tax credit amounts for 2020: Basic personal amount ……………………………… $10,783 Spouse or common law partner amount ...
As announced in the 2019 Economic Outlook and Fiscal Review, the provincial small business corporate income tax rate will be reduced, effective as of January 1, 2020. As of that date, the rate will dr...
In the 2019 Ontario Economic Outlook and Fiscal Review released by the provincial government on November 7, the Minister of Finance confirmed the government’s commitment to balance the budget by 202...
In the fall Economic Outlook and Fiscal Review released on November 6, the Minister of Finance announced that the provincial corporate income tax rate applied to Ontario small businesses will be reduc...
The Ontario Minister of Finance has announced that the 2019 Fall Economic Statement will be brought down on Wednesday November 6, 2019. That economic statement will update the revenue, expenditure, an...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Ontario government has released the Public Accounts which summarize the province’s financial position at the end of the 2018-19 fiscal year, which ended March 31, 2019. The related press release...
The province of Ontario levies an Estate Administration Tax (formerly known as probate fees) on the total value of the estate of a deceased person. In this year’s budget, the provincial government a...
The Ontario government has released the province’s financial results for the first quarter (April 1 – June 30) of the 2019-2020 fiscal year. Those results indicate that the deficit projection for ...
The province of Ontario levies a land transfer tax (LTT) on each purchase and sale of property in the province. The province also provides first-time homebuyers in Ontario with a refund of LTT which w...
The province of Ontario provides residents with a number of refundable tax credits, with eligibility for those credits based on age, income, and type and place of residence. The current benefit year f...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
Ontario imposes a 15% non-resident speculation tax (NRST) on purchases of residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent res...
In its 2019-20 Budget, the Ontario government announced a new non-refundable tax credit for lower-income working residents of the province. That credit, the Low-income Individuals and Families Tax (LI...
The province of Ontario levies an Estate Administration Tax (EAT), which is more commonly known as probate fees. In the 2019-20 Budget, the province announced that changes would be made to the EAT, as...
The 2019-20 Ontario Budget released on April 11, 2019 indicates that the province will not achieve a balanced budget until the 2023-24 fiscal year. The Budget papers show that the province expects the...
The 2019-20 provincial Budget brought down on April 11 included the announcement of a new refundable child care tax credit, claimable for the 2019 and subsequent taxation years. The new credit will be...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Ontario government has announced that the province’s Budget for the upcoming (2019-20) fiscal year will be brought down on Thursday April 11, 2019. Once the Budget is released, the Budget papers...
The provincial government has issued its fiscal update for the Third Quarter of the 2018-19 year, and that update shows a $1 billion reduction in the province’s deficit. That deficit is now projecte...
The Ontario government has announced that it will be carrying out a consultation process with respect to the laws which govern real estate professionals in Ontario. The process will address a broad ra...
The provincial government has announced that it will be holding a consultation process with respect to changes to the provincial automobile insurance program. Both consumers and businesses can provide...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Canada Revenue Agency has issued a supplement to the payroll deduction tables to be used for residents of Ontario during the 2019 tax year. The supplement, which can be found on the CRA website at...
The Ontario Minister of Finance has announced the start of the consultation process leading to the release of the province’s 2019-20 Budget next spring. There are several options for Ontario residen...
In the recent Economic Outlook and Fiscal Review, the Ontario Minister of Finance announced that the annual payroll threshold for the province’s Employer Health (payroll) Tax (EHT) would be increase...
The province of Ontario will provide the following personal tax credit amounts for 2019: Basic personal amount ………………………………… $10,582 Spouse or equivalent to spouse amount …...
The Ontario government has reversed the minimum wage increase which had been scheduled to take effect on January 1, 2019. On that date, the minimum wage was scheduled to increase from $14 to $15 per h...
In the 2018 Economic Outlook and Fiscal Review issued on November 15, the provincial government announced that, beginning with the 2019 tax year, low-income individuals and families will be eligible f...
The province provides a program under which low-income seniors and low-income persons with disabilities can obtain a partial deferral of property tax and education tax. The tax deferral applies to the...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The government of Ontario has announced that planned fee increases with respect to licensing fees for drivers in the province, which were to have taken effect on September 1, 2018, have been cancelled...
The Ontario government provides an online service – ONT-TAXS, through which Ontario businesses can file and amend returns, make tax payments, and track the status of such returns and payments. The s...
The new benefit year for the Ontario Trillium Benefit (OTB) began in July 2018 and will run until June 2019. The OTB is a refundable tax credit which is claimed on the annual tax return and paid to ta...
As announced in this year’s provincial Budget, Ontario has altered its personal tax rate structure. The changes announced include the elimination of the provincial surtax and the replacement of the ...
The Ontario government has announced that the existing cap-and-trade carbon tax system will be eliminated, effective as from July 3, and that provincial government programs which were funded under tha...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Canada Revenue Agency (CRA) has re-issued the payroll deductions online calculator to be used by Ontario employers in calculating employee source deductions starting July 1, 2018. The updated vers...
The province provides eligible Ontario residents with a number of refundable tax credits and benefits. Those benefits are paid on a monthly basis, and eligibility for most benefits is based, in part, ...
The Ontario Research and Development Tax Credit (ORDTC) is a 3.5% non-refundable tax credit earned on eligible R&D expenditures. As announced in this year’s provincial Budget, eligible busines...
The Ontario government recently enacted legislation to implement announcements made in this year’s provincial budget. Those announcements include two changes affecting seniors in the province, as fo...
The provincial government has announced changes that will provide Ontario residents with increased access to personal information held by credit reporting agencies. Under the new rules, certain credit...
The province of Ontario provides a number of tax credits to individual residents of the province, and those benefits are paid on monthly basis. The next benefit year will start in July 2018 and run un...
In this year’s Budget, the provincial government announced that the non-refundable tax credit provided to taxpayers who make qualifying donations to charity would be increased. The credit is a two-l...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Ontario Budget for the 2018-19 fiscal year, which was brought down on March 28, included the announcement of changes to the province’s personal income tax rate structure, with such changes havin...
Previously announced changes to Ontario’s employment standards laws will take effect on April 1, 2018. The upcoming changes will, for the most part, affect temporary, part-time, and seasonal employe...
The provincial government has announced that Ontario’s 2018-19 Budget will be brought down by the Minister of Finance on Wednesday, March 28 at around 4 p.m. Once the Budget is announced, the Budget...
The province of Ontario will provide the following personal tax credit amounts for 2018: Basic personal amount ………………………………… $10,354 Spouse or equivalent to spouse amount ...
The provincial government has announced that, effective as of March 1, 2018, unsolicited door-to-door sales of the following appliances will no longer be permitted: air cleaners, air conditioners, a...
The release of Ontario’s Third Quarter Finances report indicates that the province remains on track to balance the budget for the 2017-18 fiscal year, although the amount of the projected surplus ha...
The provincial government has announced that, effective for leases signed on or after April 30, 2018, residential landlords in Ontario will be required to use a new standard-form, plain-language lease...
For the 2018 tax year, the province of Ontario will levy personal income tax based on the following tax rates and brackets. 05% on taxable income between $10,354 and $42,960; 15% on taxable income ...
The province of Ontario provides a number of refundable tax credits to individual residents of the province. Several of those credits are combined and paid as a single monthly benefit — the Ontario ...
The government of Ontario has announced the launch of its pre-budget consultation process leading to the release of the province’s 2018-19 Budget. That budget consultation process has several compon...
The Canada Revenue Agency has released the 2017 T1 Individual Income Tax Return and Benefit form to be used by individuals who were residents of Ontario at the end of that year. The T1 form package (w...
The province of Ontario charges and pays interest on underpayments and overpayments of tax at rates prescribed by statute and set at the beginning of each calendar quarter. The rates levied and paid f...
The Canada Revenue Agency (CRA) has issued the payroll deduction tables which Ontario employers will use to determine employee source deductions for federal and provincial income tax, Canada Pension P...
The Canada Revenue Agency has issued the Ontario TD1 form and worksheet which will be used by taxpayers resident in the province, and their employers, to determine required provincial income tax sourc...
The Ontario government has enacted a number of changes to the province’s employment standards laws, and those changes include the following: the Ontario minimum wage will increase to $14 per hour o...
The province of Ontario provided employers who hired and trained eligible apprentices in designated construction, industrial and motive power, and certain service trades with a refundable tax credit, ...
In the 2017 Economic and Fiscal Review issued on November 14, Ontario’s Minister of Finance announced that the provincial small business tax rate would be reduced, effective as of January 1, 2018, f...
While the need for charitable donations for any number of causes is a year-round reality, appeals for such donations tend to increase as the holiday season and the end of the calendar year approach. And generally, those appeals are met, as Canadians have a well-deserved reputation for supporting charitable causes, through donations of both money and goods. Our tax system supports that generosity by providing both federal and provincial tax credits for qualifying donations made. In all cases, in order to claim a credit for a donation in a particular tax year, that donation must be made by the end of that calendar year.
While the need for charitable donations for any number of causes is a year-round reality, appeals for such donations tend to increase as the holiday season and the end of the calendar year approach. And generally, those appeals are met, as Canadians have a well-deserved reputation for supporting charitable causes, through donations of both money and goods. Our tax system supports that generosity by providing both federal and provincial tax credits for qualifying donations made. In all cases, in order to claim a credit for a donation in a particular tax year, that donation must be made by the end of that calendar year.
There is an additional reason, when planning charitable donations, to ensure that such donations are made by December 31. The credit provided by the federal government is a two-level credit, in which the percentage credit claimable increases with the amount of donation made. For federal tax purposes, the first $200 in donations is eligible for a non-refundable tax credit equal to 15% of the donation. The credit for donations made during the year which exceed the $200 threshold is, however, calculated as 29% of the excess. Finally, where the taxpayer making the donation has taxable income (for 2024) over $246,752, charitable donations above the $200 threshold can receive a federal tax credit of 33%.
As a result of the two-level credit structure, the best tax result is obtained when donations made before the end of the calendar year are maximized. For example, a qualifying charitable donation of $400 made in December 2024 will receive a federal credit of $88.00 ($200 times 15% plus $200 times 29%). If the same amount is donated, but the donation is split equally between December 2024 and January 2025, the total credit claimable is only $60.00 ($200 times 15% plus $200 times 15%), and the 2025 donation can’t be claimed until the 2025 return is filed in April of 2026. And, of course, the larger the donation made in any one calendar year, the greater the proportion of that donation which will receive credit at the 29% level rather than the 15% level.
It’s also possible to carry forward, for up to five years, donations which were made in a particular tax year, but not claimed on the tax return for that year. So, if donations made in 2024 don’t reach the $200 level, it’s usually worth holding off on claiming the donation and carrying it forward to the next year in which total donations, including carryforwards, are over that threshold. Of course, this also means that donations made but not claimed in any of the 2019, 2020, 2021, 2022, or 2023 tax years can be carried forward and added to the total donations made in 2024, and the total then claimed on the 2024 tax return. There is a ceiling on the amount of donations which can be claimed in any one calendar year, but that ceiling is a very generous one – a taxpayer can claim any qualifying current or carryforward donations up to a limit of three quarters of the taxpayer’s net income for the year.
When claiming charitable donations, it’s possible to combine donations made by oneself and one’s spouse and claim them on one spouse’s return. Generally, it makes sense to do so in order to maximize the total amount of donations claimed by a single individual, and therefore the amount of donations which can qualify for the higher tax credit rate(s).
Regardless of when a charitable donation is made or who claims it for tax purposes, would-be donors are well advised to carefully consider the charities to which they donate. It’s an unfortunate reality that while most organizations seeking charitable donations are legitimate, the charitable sector attracts its share of scammers and fraudsters whose only aim is to personally profit from the generosity of others. Such charitable donation frauds arise, in particular, whenever there are Canadian or world events like wars or natural disasters and people are particularly motivated to help. After every such event a flurry of “instant” charities spring to life, seeking donations which may or may not actually be used as represented. And, while some of the individuals or organizations who seek to raise funds in response to particular events may actually be well intentioned, the reality is that they are unlikely to have either the infrastructure or the experience needed to actually carry out their stated or intended aims. And others, of course, are simply scammers seeking to capitalize on the desire of Canadians to help in response to disaster or other need.
There are two ways to ensure that one’s charitable dollar is actually utilized as intended. The first is to donate only to large international charities which have been in existence for some time and which have both expertise and experience in utilizing charitable donations in an efficient and effective way. However, where a donor is deciding whether to make a donation to a newer or less well-known charity, it’s relatively easy to find information about that charity on the website of the Canada Revenue Agency.
Only donations made to registered charities can be claimed for purposes of the charitable donations tax credit. The Canada Revenue Agency maintains on its website a listing of all such registered charities; that listing (which is searchable) can be found at https://apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch?request_locale=en.
That webpage will also provide information on the charity’s activities, including the date on which it became a registered charity. Through that site (which is updated daily by the Canada Revenue Agency), it’s also possible to obtain information on the countries in which the charity operates, the nature of its charitable activities, and details of its revenues and expenditures, all of which can help a would-be donor to determine whether or not to make a donation.
Detailed information on calculating and claiming the charitable donation tax credit is available on the same website at Giving to charity: Information for donors - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Residents of the eight Canadian provinces in which the federal fuel charge (more commonly known as the federal carbon tax) is levied are entitled to claim and receive the federal Canada Carbon Rebate (CCR). That rebate (formerly known as the Climate Action Incentive Payment) is a non-taxable payment made four times a year (in April, July, and October of 2024 and January 2025) to help offset the cost of that federal carbon tax.
Residents of the eight Canadian provinces in which the federal fuel charge (more commonly known as the federal carbon tax) is levied are entitled to claim and receive the federal Canada Carbon Rebate (CCR). That rebate (formerly known as the Climate Action Incentive Payment) is a non-taxable payment made four times a year (in April, July, and October of 2024 and January 2025) to help offset the cost of that federal carbon tax.
For 2024, residents of Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, Newfoundland and Labrador, New Brunswick, and Prince Edward Island are eligible for the CCR. Unlike other federal credits, eligibility for the CCR is based solely on the province of residence of the individual, and is not affected in any way by the income of the person claiming it. Specifically, all individuals who were resident in Canada during the previous month and are resident in any of the above eight provinces on the first day of the month in which the rebate is paid are eligible to receive it, regardless of income.
The CCR has two elements – the basic rebate and the rural supplement. The amount of both will differ, depending on the taxpayer’s province of residence. The basic annual rebate amounts payable for the 2024-25 payment year (April 1, 2024 – March 31, 2025) are as follows.
First Adult Second Adult Each Minor Child
Alberta $900 $450 $225
Saskatchewan $752 $376 $188
Manitoba $600 $300 $150
Ontario $560 $280 $140
Nova Scotia $412 $206 $103
New Brunswick $380 $190 $95
PEI $440 $220 $110
Nfld and Labrador $596 $298 $149
The rural supplement, as the name implies, is provided to Canadians who live outside metropolitan areas and who are likely to have higher energy needs and consequently greater federal carbon tax expenditures. The rural supplement is calculated as a percentage of the basic rebate and was formerly equal to 10% of that basic rebate. However, that percentage amount has been increased, effective as of June 2024, to 20% of the basic rebate.
The increased rural supplement was not included in the April and July 2024 payments; consequently, the payment to be made on October 15 will include both the increased rural supplement for October, as well as retroactive payments for April and July.
While the general rules provide that the rural supplement is provided to Canadians who live outside metropolitan areas, all residents of Prince Edward Island automatically receive the rural supplement, and that is reflected in the figures shown above.
Unlike some other federal credit and rebate programs, there is no requirement for individual Canadians to file an application for the CCR for adults. However, in order to receive the CCR, all individuals must file an annual tax return with the Canada Revenue Agency, as information on that return is used to determine both eligibility (based on province of residence) and the amount of the available rebate (based on family composition) for the upcoming benefit year. There is no need to check any box or complete any particular line of the return in order to receive the basic rebate; however, individuals who are claiming the rural supplement (other than residents of PEI) must check off a box on page 2 of the federal income tax return, indicating that they are eligible for that supplement. Finally, in order to receive the CCR for a minor child, it is necessary that the child be registered for purposes of either the Child Tax Benefit program, or the GST/HST tax credit.
As shown above, a rebate amount is issued for each adult and each child in a family. However, only one global payment including rebate amounts for all family members is issued each quarter (around the 15th of April, July, October, and January). Those payments (of both the basic rebate and the rural supplment) are made to the adult in the family whose tax return for the previous year is filed first. Where parents share custody of a child or children, 50% of the rebate for that child or children will be paid to each parent.
The Canada Carbon Rebate is among the easiest and most beneficial of the federal rebates and credits to qualify for and to claim, in that the only qualification needed is that the taxpayer be a resident of one of the provinces in which the federal carbon tax is levied, the only step needed to claim the rebate is the filing of an annual tax return, and finally, the full amount of the rebate (which can be as much as $1,800 annually for a family of four) is non-taxable and is received regardless of individual or family income.
The basic rules governing the Canada Carbon Rebate program are straightforward, and any needed computation of the amount of benefit claimable is done by the CRA when the taxpayer’s return is assessed. Taxpayers who have questions about the CCR can find detailed information on the program on the CRA website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-carbon-rebate.html and https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4215.htm.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The Old Age Security (OAS) program is one of the two major federal benefit programs available to older Canadians – the other being the Canada Pension Plan (CPP). While both programs provide taxable monthly payments to Canadians, there are significant differences between the two. The Canada Pension Plan is a contributory system, with Canadians contributing a percentage of income earned during their working years, and with the amount of benefits receivable based on the amount of contributions made. By contrast, OAS benefits are paid out of general government revenues, with no requirement that recipients pay into the plan. The amount of the monthly OAS benefit is a fixed amount which is payable to anyone who has been resident in Canada for at least 40 years after the age of 18. (Reduced benefits are payable to those whose period of Canadian residence after the age of 18 is between 10 and 40 years.) For the fourth quarter of 2024 (October to December), that maximum monthly benefit for recipients under the age of 75 is $728., while benefit recipients aged 75 and older can receive up to $800. per month.
The Old Age Security (OAS) program is one of the two major federal benefit programs available to older Canadians – the other being the Canada Pension Plan (CPP). While both programs provide taxable monthly payments to Canadians, there are significant differences between the two. The Canada Pension Plan is a contributory system, with Canadians contributing a percentage of income earned during their working years, and with the amount of benefits receivable based on the amount of contributions made. By contrast, OAS benefits are paid out of general government revenues, with no requirement that recipients pay into the plan. The amount of the monthly OAS benefit is a fixed amount which is payable to anyone who has been resident in Canada for at least 40 years after the age of 18. (Reduced benefits are payable to those whose period of Canadian residence after the age of 18 is between 10 and 40 years.) For the fourth quarter of 2024 (October to December), that maximum monthly benefit for recipients under the age of 75 is $728., while benefit recipients aged 75 and older can receive up to $800. per month.
The other difference between the OAS and CPP programs is that eligible Canadians can begin to receive a CPP retirement benefit at age 60, but OAS benefits can start only once an individual turns 65. Formerly, OAS benefits were automatically paid to eligible recipients once they reached that age. Now, however, Canadians who are eligible to receive OAS benefits are able to defer receipt of those benefits for up to five years, to when they turn 70 years of age. For each month that an individual Canadian defers receipt of those benefits, the amount of benefit eventually received increases by 0.6%. The longer the period of deferral, the greater the amount of monthly benefit eventually received. Where receipt of OAS benefits is deferred for a full 5 years, until age 70, the monthly benefit received is increased by 36%.
It can, however, be difficult to determine, on an individual basis, whether and to what extent it would make sense to defer receipt of OAS benefits. Some of the difficulty in deciding whether to defer – and for how long – lies in the fact there are no hard and fast rules, and the decision is very much an individual one. Fortunately, however, there are a number of factors which each individual can consider when making that decision.
The first such factor is how much total income will be required, at the age of 65, to finance current needs. It’s also necessary to determine what other sources of income (employment income from full- or part-time work, Canada Pension Plan retirement benefits, employer-sponsored pension plan benefits, annuity payments, and withdrawals from registered retirement savings plans (RRSPs) and registered retirement income fund (RRIFs)) are available to meet those needs, both currently and in the future, and when receipt of those income amounts can or will commence or cease. Once income needs and the sources and possible timing of each is clear, it’s necessary to consider the income tax implications of the structuring and timing of those sources of income. The tax rate payable on retirement income (as with all income) increases as income rises and, in addition, the availability of a number of federal tax credits and benefits is eroded at higher incomes. The ultimate goal, as it is at any age, is to ensure sufficient income to finance a comfortable lifestyle while at the same time minimizing both the tax bite and the potential loss of tax credits and benefits.
In making those calculations, the following income tax thresholds and benefit cut-off figures are a starting point.
- Income in the first federal tax bracket is taxed at 15%, while income in the second bracket is taxed at 20.5%. For 2024, that second income tax bracket begins when taxable income reaches $55,867.
- The Canadian tax system provides (for 2024) a non-refundable tax credit of $8,790 for taxpayers who are age 65 or older at the end of the tax year. The amount of that credit is reduced once the taxpayer’s net income for the year exceeds $44,325.
- Individuals can receive a GST/HST refundable tax credit, which is paid quarterly. For 2024, the full credit is payable to individual taxpayers whose family net income is less than $44,324.
- Taxpayers who receive Old Age Security benefits and have income over a specified amount are required to repay a portion of those benefits through a mechanism known as the “OAS recovery tax”, or clawback. Taxpayers whose net income for 2024 is more than $90,997 will have a portion of their future OAS benefits “clawed-back”.
What other sources of income are currently available?
More and more, Canadians are not automatically leaving the work force at the traditional retirement age of 65. Those who continue to work at paid employment and whose employment income is sufficient to finance their chosen lifestyle may well prefer to defer receipt of OAS. Similarly, a taxpayer who begins receiving benefits from an employer’s pension plan when they turn 65 may be able to postpone receipt of OAS benefits.
Is the taxpayer eligible for Canada Pension Plan retirement benefits, and at what age will those benefits commence?
Nearly all Canadians who were employed or self-employed after the age of 18 paid into the Canada Pension Plan and are eligible to receive CPP retirement benefits. While such retirement benefits can be received as early as age 60, receipt can also be deferred and received any time up to the age of 70. As is the case with OAS benefits, CPP retirement benefits increase with each month that receipt of those benefits is deferred. Taxpayers who are eligible for both OAS and CPP will need to consider the impact of accelerating or deferring the receipt of each benefit in structuring retirement income.
Does the taxpayer have private retirement savings through an RRSP?
Receipt of a monthly pension from an employer-sponsored pension plan is no longer the reality for the majority of Canadian retirees; such retirees have generally saved for their retirement through a registered retirement savings plan (RRSP). While taxpayers can choose to withdraw amounts from such plans at any age, they are required to collapse their RRSPs by the end of the year in which they turn 71, and to begin receiving income from those savings. There are a number of options available for structuring that income but, whatever the option chosen (usually converting the RRSP into a registered retirement income fund (RRIF) or purchasing an annuity), it will mean that the taxpayer will begin receiving taxable income amounts from those RRSP funds in each year after they turn 71. Taxpayers who have significant retirement savings in RRSPs should, in determining when to begin receiving OAS benefits, consider the tax impact that receipt of that additional taxable income amount from their RRSP will have in every future year.
The ability to defer receipt of OAS benefits does provide Canadians with more flexibility when it comes to structuring retirement income. The price of that flexibility is increased complexity, particularly where, as is the case for most retirees, multiple sources of income and the timing of each of those income sources must be considered, and none can be considered in isolation from the others.
Individuals who are undertaking that decision-making process will find some assistance on the Service Canada website. That website provides a very helpful Retirement Income Calculator, which, based on information input by the user, will calculate the amount of OAS which would be payable at different ages. The calculator will also determine, based on current RRSP savings, the monthly income amount which those RRSP funds will provide during retirement. To use the calculator, it is necessary to know the amount of Canada Pension Plan benefit which will be received. Taxpayers who are registered for online access to My Service Canada Account can find that information there; those who are not can obtain that figure by calling Service Canada at 1-800 277-9914.
The Retirement Income Calculator can be found at https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
In the 2024-25 Federal Budget released earlier this year, the federal government announced changes to the rules which govern mortgage lending in Canada. Those changes had two goals: making it easier for first-time home buyers to qualify for a mortgage, and providing an incentive to encourage the building of new residential properties in Canada. Finance Canada recently announced two additional changes to mortgage lending rules; the first of those changes builds on one of the Budget announcements, while the second reduces the amount of the down payment which some home purchasers are required to make.
In the 2024-25 Federal Budget released earlier this year, the federal government announced changes to the rules which govern mortgage lending in Canada. Those changes had two goals: making it easier for first-time home buyers to qualify for a mortgage, and providing an incentive to encourage the building of new residential properties in Canada. Finance Canada recently announced two additional changes to mortgage lending rules; the first of those changes builds on one of the Budget announcements, while the second reduces the amount of the down payment which some home purchasers are required to make.
To understand the purpose and impact of these changes, a bit of background on how mortgage lending works is necessary. In Canada, all home purchasers must make a down payment on the purchase price of a home. The current required minimum down payment is a percentage of the purchase price, as follows:
$500,000 or less ……………………………… |
5% of the purchase price |
$500,000 to $999,999 …………………… |
5% of the first $500,000 of the purchase price; plus |
$1 million or more …………………………… |
20% of the purchase price |
A mortgage is a loan obtained to help finance the purchase of a home, and the mortgage amount is the difference between the down payment made and the purchase price. Where any home purchaser makes a down payment of less than 20% of the purchase price of the property, they are required to obtain (and pay for) mortgage default insurance through the Canada Mortgage and Housing Corporation (CMHC). The home purchaser must, as well, repay that mortgage (known as a “high-ratio mortgage”) within 25 years (known as the “amortization period”). Where the down payment amount is more than 20% of the purchase price of the home, there is no limit on the length of time the homeowner can take to repay the full mortgage amount (although, as a practical matter, the maximum amortization period which most major mortgage lenders in Canada will provide is 30 years.).
In its Budget for the 2024-25 fiscal year, the federal government announced that an extended amortization period would be provided for first-time home buyers purchasing a new residential property. In July of this year, Finance Canada provided details of that change, announcing that mortgage lenders would be allowed to provide 30-year amortization periods on insured mortgages to all first-time home buyers who were purchasing a new residential property. In other words, the existing 25-year limit on amortization periods for high-ratio mortgages insured by the Canada Mortgage and Housing Corporation would be extended to allow for 30-year amortization periods – but only for first-time home buyers purchasing new residential properties. That change was effective as of August 1, 2024. On September 16, Finance Canada announced that eligibility for a 30-year amortization (that is, the option to repay a mortgage over 30 years rather than 25 years) would be expanded to become available to ALL first-time home buyers and to ALL buyers of new residential properties. That change will take effect on December 15, 2024.
In the same announcement made on September 16, changes were made to the rules which determine how large a down payment a home purchaser must make. Specifically, the current requirement to make a minimum 20% down payment on a home costing $1 million or more is increased to apply only to homes costing $1.5 million or more. That change is also effective for any mortgage taken out on or after December 15, 2024. As of that date, required down payments will be as follows:
$500,000 or less ……………………………… |
5% of the purchase price |
$500,000 to $1,499,999 ………………… |
5% of the first $500,000 of the purchase price; plus |
$1.5 million or more ………………………… |
20% of the purchase price |
As with all such measures, there are additional rules which must be consulted to determine eligibility for either an extended amortization period and/or the ability to make a lower down payment. Those rules are outlined in detail in a Backgrounder to the September 16 announcement; that Backgrounder can be found on the Finance Canada website at https://www.canada.ca/en/department-finance/news/2024/09/delivering-the-boldest-mortgage-reforms-in-decades.html. The press releases for the July and September announcements are available on the same website at https://www.canada.ca/en/department-finance/news/2024/07/government-announces-30-year-amortizations-for-insured-mortgages-to-put-homeownership-in-reach-for-millennials-and-gen-z.html, and https://www.canada.ca/en/department-finance/news/2024/09/government-announces-mortgage-reform-details-to-ensure-canadians-can-access-lower-monthly-mortgage-payments-by-december-15.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
They can be accessed below.
Corporate:
Personal:
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
While the current state of the Canadian health care system is far from perfect, Canadians are nonetheless fortunate to have a publicly funded health care system, in which most major medical expenses are covered by provincial health care plans. Notwithstanding, there is a large (and growing) number of medical and para-medical costs – including dental care, prescription drugs, physiotherapy, ambulance trips, and many others – which must be paid for on an out-of-pocket basis by the individual. In some cases, such costs are covered by private insurance, usually provided by an employer, but not everyone benefits from private health care coverage. Self-employed individuals, those working on contract, or those whose income comes from several part-time jobs do not usually have access to such private insurance coverage. Fortunately for those individuals, our tax system acts to help cushion the blow by providing a 15% federal non-refundable medical expense tax credit (METC) to help offset out-of-pocket medical and para-medical costs which must be incurred.
While the current state of the Canadian health care system is far from perfect, Canadians are nonetheless fortunate to have a publicly funded health care system, in which most major medical expenses are covered by provincial health care plans. Notwithstanding, there is a large (and growing) number of medical and para-medical costs – including dental care, prescription drugs, physiotherapy, ambulance trips, and many others – which must be paid for on an out-of-pocket basis by the individual. In some cases, such costs are covered by private insurance, usually provided by an employer, but not everyone benefits from private health care coverage. Self-employed individuals, those working on contract, or those whose income comes from several part-time jobs do not usually have access to such private insurance coverage. Fortunately for those individuals, our tax system acts to help cushion the blow by providing a 15% federal non-refundable medical expense tax credit (METC) to help offset out-of-pocket medical and para-medical costs which must be incurred.
The difficulty for such individuals is that while the tax credit claimable is simple in concept, it can be difficult to determine just what kinds of expenses are claimable for purposes of that credit (not all are, and others are claimable only if certain criteria are met), the extent to which expenses can be claimed (only expenses which exceed a certain amount can be claimed, and that amount changes with the income of the taxpayer), and who should claim the expenses (usually, but not always, it makes more sense for the lower-income spouse to claim medical expenses incurred by the entire family).
It's not hard to see why taxpayers can become confused and frustrated when trying to file a claim for medical expenses on the annual return. However, the process of determining the available claim really comes down to answering three questions, as follows.
- Which of my expenses are claimable and are there additional criteria imposed?
- Of my total medical expenses, how much can I claim?
- Should I or my spouse should make the claim for the medical expense tax credit?
Which of my expenses are claimable, and are there additional criteria imposed?
The good news for taxpayers is that there are a great number of different kinds of medical expenses which qualify for the medical expense tax credit, and the Canada Revenue Agency provides a detailed alphabetical (and searchable) listing of those expenses on its website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.
While each of the medical expenses listed on the CRA website are eligible to be claimed for purposes of the medical expense tax credit, for each such expense it’s necessary to determine whether there are additional criteria which must be met in order to make that particular expense eligible for the credit.
Probably the most important criterion for most taxpayers is that, in some cases, a particular expense is only claimable if a prescription has been obtained from a medical doctor indicating a need on the part of the taxpayer to incur that expense. However, making a determination of when it’s necessary to obtain a prescription from a medical professional in order to ensure that the planned expenditure will qualify for the credit is far from intuitive. For instance, in order to claim the medical expense tax credit for the cost of a cane or a walker, it is necessary to obtain a prescription for that cane or walker. However, where costs are incurred to purchase a wheelchair, those costs are eligible for the medical expense credit, with no requirement that a prescription of any kind be obtained.
The listing of eligible medical expenses found on the CRA website does indicate the kinds of expenses for which a prescription is required; where the amount of a planned expenditure for a medical expense is significant, it’s well worth consulting the CRA website to ensure that the purchase is done in a way that will make it possible to claim the METC for the cost incurred.
Other types of medical expense costs can be claimed for purposes of the credit only where the person incurring that expenditure qualifies for the federal disability tax credit. Once again, the listing found on the CRA website indicates the types of expenditures to which this requirement applies.
Of my total medical expenses, how much can I claim?
Here again, the basic rule which determines how much a taxpayer can claim in a particular taxation year can be stated simply, but is more complex to apply. The basic rule is that for a taxation year a taxpayer can claim eligible medical expenses which exceed 3% of the taxpayer’s net income, or $2,759, whichever is less.
Put in more practical terms, the rule for 2024 is that any taxpayer whose net income for the year is $91,967 or less will be entitled to claim medical expenses that are greater than 3% of his or her net income for the year. Those having income of more than $91,967 will be limited to claiming qualifying expenses which exceed the $2,759 threshold.
Take, for example, a taxpayer who has $60,000 in net income for 2024 and incurs $3,400 in eligible medical expenses during the year. The computation of the available METC claim for 2024 is as follows. Based on the 3% of net income rule, the taxpayer will be entitled to claim medical expenses incurred which are more than $1,800 (3% of net income for the year). That taxpayer will therefore be able to claim $1,600 ($3,400 minus $1,800) in medical expenses for purposes of the METC.
The other aspect of determining the total expenses which can be claimed for purposes of the medical expense tax credit is that it’s possible to claim medical expenses which were incurred prior to the current tax year but weren’t claimed on the return for the year that the expenditure was made. The actual rule is that the taxpayer can claim qualifying medical expenses incurred during any 12-month period which ends in the current tax year, meaning that each taxpayer must determine which 12-month period ending in 2024 will produce the greatest amount eligible for the credit. That determination will obviously depend on when medical expenses were incurred so there is, unfortunately, no universal rule of thumb which can be used.
Which spouse should make the claim for the medical expense tax credit?
Medical expenses incurred by family members – the taxpayer, their spouse, and children who are under the age of 18 at the end of 2024, as well as certain other dependent relatives – can be added together and claimed by either spouse. In most cases, it’s best to make that claim on the tax return of the lower-income spouse, in order to maximize the amount of claimable expenses (remembering that only expenses greater than 3% of net income can be claimed).
That said, it’s also necessary to ensure that the spouse making the claim has tax payable for the year. The reason for this is that the METC is a non-refundable credit, meaning that it can be used to reduce tax otherwise payable, but cannot create or increase a refund. So, in order to maximize the use of the METC in a year, it should be claimed by the spouse whose tax payable for the year is at least as much as the amount of the METC to be claimed.
As the end of the calendar year approaches, it’s a good idea to add up the medical expenses which have been incurred during 2024, as well as those paid during 2023 and not claimed on the 2023 return. Once those totals are known, it will be easier to determine whether to make a claim for 2024 or to wait and claim 2024 expenses on the return for 2025. And if the decision is to make a claim for 2024, knowing what medical expenses were paid, and when, will enable the taxpayer to determine the optimal 12-month period for that claim.
Finally, it’s a good idea to look into the timing of medical expenses which will have to be paid early in 2025. Where those are significant expenses (for instance, a particularly costly medication which must be taken on an ongoing basis, or some expensive dental work) it may make sense, where possible, to accelerate the payment of those expenses to November or December 2024, where that means they can be included in 2024 totals and claimed on the return for this year.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The federal government provides a number of non-refundable tax credits and benefits to Canadians under the umbrella term “child and family benefits”, but likely the most widely available and most generous of those programs is the Canada Child Benefit (CCB).
The federal government provides a number of non-refundable tax credits and benefits to Canadians under the umbrella term “child and family benefits”, but likely the most widely available and most generous of those programs is the Canada Child Benefit (CCB).
The CCB is paid as a non-taxable monthly benefit to Canadian residents who have and live with one or more children under the age of 18 for whom they are primarily responsible. The CCB program, which was first introduced in 1993, replaced the former Family Allowance program, and has since gone through a number of iterations and name changes. What follows is a summary of what is available to Canadian families under the CCB program in 2024.
The CCB program has two types of benefits – the basic Canada Child Benefit (CCB) and a Child Disability Benefit (CDB). The first, the basic CCB, is provided to eligible residents of Canada who have one or more children who are under the age of 18 and who live with that child or children. The child disability benefit (CDB) is an additional monthly benefit intended to provide financial assistance to families who are caring for children who have a severe and prolonged impairment in physical or mental functions. Generally, where a child is eligible for the federal disability tax credit, parents who live with that child will be eligible to receive the CDB.
The current benefit year for both the CCB and the CDB runs from July 2024 to June 2025. During this benefit year, maximum benefits payable under the basic CCB are as follows:
- $7,787 per year ($648.91 per month) for each eligible child under the age of 6; and
- $6,570 per year ($547.50 per month) for each eligible child aged 6to 17.
Benefit eligibility under the CCB program is affected by family net income earned during the previous tax year. In other words, the amount of benefit which can be received during the 2024-25 benefit year is determined, in part, by the amount of family net income for 2023. For the 2024-25 benefit year, families having 2023 net income of $36,502 or less will receive the maximum CCB. Where that 2023 net income is greater than $36,502, the amount of benefit receivable is reduced by specified percentages and amounts, which are based on family net income and the number of children in the family. The actual benefit reduction percentages and amounts are as follows.
- For families with one eligible child, benefits are reduced by 7% of family net income between $36,502 and $79,087. Where family net income is more than $79,087, the benefit reduction is $2,981 plus 3.2% of family net income over $79,087.
- For families with twoeligible children, benefits are reduced by 13.5% of family net income between $36,502 and $79,087. Where family net income is more than $79,087, the benefit reduction is $5,749 plus 5.7% of family net income over $79,087.
- For families with three eligible children, benefits are reduced by 19.0% of family net income between $36,502 and $79,087. Where family net income is more than $79,087, the benefit reduction is $8,091 plus 8.0% of family net income over $79,087.
The Canada Disability Benefit provides eligible families with both an additional benefit amount and higher income thresholds which determine eligibility for that additional benefit amount. For the 2024-25 benefit year, the CDB provides up to $3,322 per year ($276.83 per month) for each child eligible for the disability tax credit (DTC). The CDB starts being reduced when family net income is more than $79,087, with the reduction calculated as follows: for families with one child eligible for the DTC, the reduction is 3.2% of the amount of 2023 family net income over $79,087, and for families with two or more children eligible for the DTC, the reduction is 5.7% of the amount of 2023 family net income over $79,087.
The number of variables – age of children, number of children and family net income – can make it difficult to easily calculate the amount of CCB or CDB for which a family is eligible during the current benefit year. To assist in that calculation, the federal government provides an online calculator which will determine that amount, based on information provided by the taxpayer. That online calculator can be found on the federal government website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/child-family-benefits-calculator.html.
There are two significant ways in which the CCB program differs from other federal tax credit and benefit programs. The first is that the CCB and CDB are paid once per month, throughout the benefit year (most other such credits are paid on a quarterly basis). CCB and CDB are paid around the 20th of each month – a listing of actual payment dates during 2024 can be found on the federal government website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview/canada-child-benefit-payment-dates.html.
The second difference between the CCB and other programs is more significant – unlike some other programs, CCB amounts are not paid automatically to eligible recipients. In order to receive the CCB and the CDB, it is necessary both to apply for the benefit(s) and to file an annual tax return in order to ensure that benefit payments continue. Information on how to apply is available at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview/canada-child-benefit-apply.html.
The costs of raising children are many and varied, and the financial resources required have never been small. Over the past few years, increases in both interest rates and, especially, the rate of inflation have added to nearly every one of those costs to a significant degree. Receipt of a CCB payment each month can make a substantial contribution toward meeting those costs: a Canadian family which has two children, aged 5 and 7, and whose family net income for 2023 was $50,000 can receive just over $1,000 each month in tax-free benefits during the 2024-25 benefit year.
Finally, many (although not all) Canadian provinces and territories provide a benefit to families with children living in that province or territory, which is additional to any available federal CCB which a family can claim. Detailed information on both the federal and provincial/territorial child and family benefit programs can be found on the federal government website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Canada’s tax system is a self-assessing one, meaning that the onus rests on individual taxpayers to file their annual return each spring and to pay any amounts owed. The compliance rate in Canada is high – most Canadian taxpayers comply with those tax obligations, filing returns and making any required payments on a consistent basis. Where such tax obligations aren’t met, however, the Canada Revenue Agency (CRA) has the authority to impose both penalties and interest charges.
Canada’s tax system is a self-assessing one, meaning that the onus rests on individual taxpayers to file their annual return each spring and to pay any amounts owed. The compliance rate in Canada is high – most Canadian taxpayers comply with those tax obligations, filing returns and making any required payments on a consistent basis. Where such tax obligations aren’t met, however, the Canada Revenue Agency (CRA) has the authority to impose both penalties and interest charges.
The types and amounts of penalties which can be assessed vary widely, depending on the nature of the non-compliance and, frequently, whether the taxpayer is a “repeat offender”. However, interest charges levied are always the same where taxes aren’t paid in full and on time, and those interest charges can be very substantial.
By law, the CRA charges interest at a rate which is four percentage points higher than commercial interest rates. For the third quarter of 2024, the CRA charges interest on outstanding tax amounts owed at a rate of 9.0%. More significantly, all such interest charges are compounded daily, meaning that each day the taxpayer is charged interest on both the tax amount owed and on the previous day’s interest charges. In such circumstances, interest charges can accumulate very quickly.
Where a failure to meet one’s tax obligations is simply the result of carelessness or negligence on the part of the taxpayer, it’s really not possible to avoid such charges. Sometimes, however, taxpayers fail to meet their tax obligations for reasons that are entirely outside their control. When that happens, the CRA may be willing to extend relief by forgiving interest and penalty charges, in whole or in part, through the Agency’s Taxpayer Relief Provisions.
It's important to note, at the outset, that while the CRA has issued guidelines on the circumstances in which interest and penalty relief may be provided, the decision to provide such relief is entirely discretionary on the Agency’s part – there is no right to interest and penalty relief. Second, while interest and penalty relief may be available to the taxpayer, no relief is provided with respect to actual tax amounts owed. No matter the circumstances, tax amounts owed must always be paid.
The guidelines issued by the CRA on when interest and penalty relief may be available fall into two general categories. The first addresses taxpayers who are unable to meet their tax obligations as the result of extraordinary circumstances. The first such circumstance is natural or man-made disasters which are, of course, becoming more and more common as each year increasing numbers of Canadians are forced to evacuate due to wildfires and floods. At such times, meeting one’s tax obligations is understandably a very low priority and, in the worst case scenario, the natural disaster which forced the evacuation may also result in the destruction of the taxpayer’s financial and tax records and supporting documentation, making it difficult or impossible to file returns or determine or pay amounts owed.
The other extraordinary circumstances in which the CRA is prepared to provide relief from penalty and interest charges are those which are specific to the taxpayer involved. As outlined on the CRA website, such circumstances generally involve either serious illness or accident, or serious emotional or mental distress, such as would result from a death in the taxpayer’s family.
Finally, the CRA is prepared to consider providing interest relief where the taxpayer is experiencing significant financial hardship. The CRA’s guidelines, as outlined on the Agency’s website, indicate that it would consider providing relief where paying interest amounts owed would make it difficult to provide basic necessities, such as food, medical help, transportation, or shelter, or where interest charges make up the majority of the amount owed and the taxpayer is unable to make a reasonable payment arrangement with the CRA.
In order to receive relief in situations of financial hardship, a taxpayer must be able to provide the CRA with detailed information on their current financial situation. That financial situation is outlined on a prescribed CRA form, which is available at Form RC376, Taxpayer Relief Request – Statement of Income and Expenses and Assets and Liabilities for Individuals. In addition to the information submitted on that form, the taxpayer must also provide supporting documentation, such as current mortgage statement(s), property assessment(s), rental agreement(s), loans and recurring bills, bank and credit card statements for the most recent three months, and current investment statements
Regardless of the reasons or circumstances which have led the taxpayer to submit an application for relief, the process of filing that application is the same. Taxpayers who have registered for the CRA online service My Account can file their application using that service. Those who are not registered for My Account, or would prefer filing a paper application, can find the required form on the CRA website at Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties and Interest. The address to which the completed form should be sent can be found on the last page of Form RC4288.
Whatever the method by which an application for relief is filed, the CRA will review the information submitted and make a determination of whether to cancel interest and/or penalty amounts owed, in whole or in part, in order to allow the taxpayer to pay off their tax debt. The factors considered by the Agency in determining whether to grant relief will, of course, depend in part on the circumstances giving rise to the application. In general, however, the Agency will consider the taxpayer’s tax return filing and payment history, whether the taxpayer knowingly let a balance owing exist (resulting in additional interest charges), whether reasonable care was taken in the management of the taxpayer’s tax affairs, and, finally, whether the taxpayer acted quickly to correct any delay or omission.
The CRA’s goal is to make a decision on straightforward applications made under its Taxpayer Relief Provisions within six months (180 days) after the application is received. However, not surprisingly, the Agency is currently receiving a higher-than-usual number of applications, meaning that the timeline for making decisions on those applications is now closer to eight months (or longer, for complex applications).
Where the taxpayer’s request is denied, they can make on online request to have the decision reviewed. If that decision is also negative, the only recourse is to ask a judge to review the CRA’s decision. In the great majority of cases, however, the cost of taking that step is likely to be greater than the amount of interest and penalties at issue.
In all cases, the best course of action for the taxpayer is to be proactive – to contact the CRA as soon as the taxpayer is aware that filing of a required return, or full payment of taxes owed, will not be possible. Taking the initiative and moving quickly to resolve the problem will both minimize the amount of interest which will accrue on unpaid taxes and will count in the taxpayer’s favour when the CRA considers whether to allow an application for waiver of those interest and penalty charges.
Detailed information on the Taxpayer Relief Provisions is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/taxpayer-relief-provisions.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The past five years have been a tough financial slog for most Canadian families, as they struggled to cope with the pandemic, followed by inflation which tripled from under 2% in mid-2020 to over 6% by the end of 2022, and, finally, interest rate increases which saw the Bank Rate go from less than 1% in April of 2020 to over 5% in April of 2024.
The past five years have been a tough financial slog for most Canadian families, as they struggled to cope with the pandemic, followed by inflation which tripled from under 2% in mid-2020 to over 6% by the end of 2022, and, finally, interest rate increases which saw the Bank Rate go from less than 1% in April of 2020 to over 5% in April of 2024.
While the relentless upward climb in both the rate of inflation and interest rates are finally showing signs of slowing, it’s nonetheless a fact that the cost of two truly non-discretionary components of a family budget – food and shelter – are still much more expensive than they were five years ago, and nearly all Canadian families are feeling the pinch.
While there’s plenty of financial pain to go around, one group of Canadians that is especially likely to be dealing with bad financial news in the near future is those who are renewing a mortgage. Home buyers who purchased a home five years ago and took out a five-year mortgage (as the majority do) likely got that mortgage at an interest rate of around 4% – or even less. Those seeking to renew that mortgage this year are likely facing renewal at a rate of at least 6%. That’s about a 50% increase in the mortgage interest rate, which can be enough to make the difference between a mortgage payment that is affordable, and one that is not.
To see why that’s the case, it helps to understand how mortgage payments are calculated. All mortgage payments are determined by three figures. The first is the size of the mortgage – the “principal amount”, which is the cost of the property purchased minus any downpayment made. The second is the interest rate which is charged on that principal amount. And the third is the length of time over which the principal amount of the mortgage is to be repaid – known as the “amortization period”.
Under Canadian law, anyone purchasing a home must make a down payment, and the amount of that downpayment depends on the purchase price of the property, as follows:
$500,000 or less |
|
$500,000 to $999,999 |
|
$1 million or more |
|
Where any home purchaser makes a down payment of less than 20% of the purchase price of the property, they must obtain mortgage default insurance through the Canada Housing and Mortgage Corporation (CHMC) and must, as well, repay that mortgage within 25 years. In other words, the maximum amortization period on a mortgage principal amount which represents more than 80% of the purchase of the property is 25 years. (Finance Canada recently announced that a 30-year amortization period would be allowed on some insured mortgages; however, that measure applies only as of August 1, 2024 and only to a relatively small group – first-time home buyers purchasing a newly-built property.)
Where the home purchaser makes a down payment of more than 20% (which would likely be the case for those who are already homeowners and are purchasing as part of a move up the “property ladder”), the length of the amortization period – the time frame in which the mortgage must be repaid – is not subject to that 25-year restriction. Rather, the length of that amortization period is something which is determined by agreement between the borrower and the financial institution which provides the mortgage financing.
The impact on monthly mortgage payments of a 2% change in a mortgage interest rate can be seen in the following example.
Assume that in 2019 a property owner sold their first home and, using the proceeds of that sale, is able to put down a $200,000 deposit on a home costing $650,000. The remainder of $450,000 of the purchase price is financed through a five-year mortgage at 4.0%, amortized over 25 years. The monthly mortgage payments are $2,367.
In 2024 that mortgage comes up for renewal, but the interest rate is now 6.0%, and the amortization period is now down to 20 years. Payments made over the previous five years have reduced the mortgage principal amount from $450,000 to $392,000, but the increased interest rate means that monthly payments will now be $2,800 – an increase of almost $450 per month, or $5,400 per year.
It's important to remember, as well, that mortgage payments are made out of after-tax income. In other words, in order to come up with the $5,400 per year needed to meet the increased mortgage payment obligations, a homeowner will either have to reallocate that $5,400 from the payment of other household expenditures, or will have to generate additional pre-tax income of almost $8,000 annually, which is $5,600 in after-tax income, assuming a marginal tax rate of 30%. Neither is a realistic scenario for most Canadian households right now.
Homeowners facing a mortgage renewal which will result in monthly mortgage payment obligations which cannot be met out of current household resources are between the proverbial rock and a hard place. Realistically, the only component of a mortgage over which a homeowner who is renewing that mortgage has any element of choice is the amortization period. The principal amount of the mortgage is the amount which was originally borrowed, less any principal repayments made, and can only be reduced by making additional payments. The interest rates in effect at the time of renewal are set by the lender and, while subject to negotiation, are not likely to be significantly less than the lender’s posted rates. Where a homeowner is facing an increase in monthly mortgage payments which simply aren’t manageable, the options are limited. The first is a sale of the home and the purchase of a smaller, less expensive property, but that’s rarely a situation which any homeowner wants to be forced into. The second option (with the agreement of the lender) is to extend the amortization period of the mortgage, in order to reduce monthly mortgage payments.
Extending the amortization period of a mortgage can have a dramatic effect on the amount of monthly mortgage payments, but it’s a choice that also comes with a cost, in the form of increased total interest payments over the life of the mortgage.
Continuing with the above example, assume that the homeowner who is renewing the mortgage at 6.0% for a five-year term chooses to extend the amortization period on that mortgage from the current 20 years to 30 years. (Although there is no legal limit on an amortization period for an uninsured mortgage, most major Canadian lending institutions do not provide amortizations of more than 30 years.)
The change in the amortization period from 20 years to 30 years will result in a monthly mortgage payment of $2,332 on a principal amount of $392,000 at 6% interest, meaning that the new mortgage payment amount will be slightly less than it was over the previous five years since the home was purchased, making it a manageable amount for the homeowner.
The cost of making this choice lies in the amount of interest which is paid on the mortgage over that amortization period, and that cost can be very substantial. If the homeowner had renewed their mortgage based on a 20-year amortization and a monthly mortgage payment of $2,800, the amount of interest which would be paid over that 20-year period would be $278,000. If the amortization period is changed to 30 years, reducing the monthly mortgage payment to $2,332, the amount of interest that would be paid over that 30-year period will be $447,000. Choosing to extend an amortization is a very consequential financial decision.
As is almost always the case in financial planning, there isn’t a “right” answer – the right course of action depends almost entirely on the individual circumstances involved. For homeowners who are faced with a choice between extending an amortization period or being forced into either defaulting on the mortgage or selling the house, the decision to extend an amortization period may well be justified in the circumstances. However, where the choice made is to extend an amortization period, it’s important to treat that decision as a short-term measure taken solely to gain some temporary financial relief. A homeowner who extends the amortization period on a mortgage for the upcoming mortgage term can (and should, if at all possible) plan to reduce that mortgage amortization period at the next mortgage renewal date. As well, if and when household finances improve over the next five years, any available funds should be used to make additional payments on the mortgage or, where such additional payments aren’t allowed, to set such funds aside to make a lump-sum payment at the time of the next renewal. Both measures will work to reduce the amount of interest which must be paid over the life of the mortgage.
Being unable to afford one’s mortgage payments and facing the prospect of going into default on the mortgage is a situation that most homeowners would do almost anything to avoid. Those are undeniably stressful circumstances, but in most cases solutions are possible. The federal government, through the Financial Consumer Agency of Canada, provides an extremely useful webpage (at https://www.canada.ca/en/financial-consumer-agency/services/mortgages.html) which contains a wealth of information on mortgages and mortgage financing. That webpage includes a Mortgage Calculator (found at https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MC-CH-eng.aspx) which can be used to calculate the effect that different interest rates and amortization periods will have on both the amount of monthly mortgage payments and total interest costs which will be paid over the life of the mortgage. Taking the time to do so will enable a homeowner facing a mortgage renewal to make the most informed choice in their particular circumstances.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Members of the baby boom generation who were born between 1946 and 1965 are now between 59 and 78 years of age, and make up about a quarter of the Canadian population. Many, if not most, are now retired, and the older members of that generation are likely experiencing the changes to physical health, strength, and agility that come with age. The process of aging is an extremely variable one – some individuals are healthier and more active at age 80 than others are at 60, but the physical changes that accompany aging come, inevitably, to everyone. And when those changes take place, it’s necessary to make some hard decisions about a number of things.
Members of the baby boom generation who were born between 1946 and 1965 are now between 59 and 78 years of age, and make up about a quarter of the Canadian population. Many, if not most, are now retired, and the older members of that generation are likely experiencing the changes to physical health, strength, and agility that come with age. The process of aging is an extremely variable one – some individuals are healthier and more active at age 80 than others are at 60, but the physical changes that accompany aging come, inevitably, to everyone. And when those changes take place, it’s necessary to make some hard decisions about a number of things.
One of the most consequential decisions to be made when age-related physical changes become a factor in decision-making is whether one’s current living arrangements are still suitable. The overwhelming choice of older Canadians is to “age in place” – that is, to remain in the homes they already occupy, living independently in a familiar community and close to family and friends. While that’s the ideal, existing living arrangements can, in some cases, no longer meet the needs of the individual, or can even be unsafe.
Almost always, changes can be made to an existing home to make it both more convenient and safer to live in for an older resident. Those changes can range from something as small as the installation of a grab bar in a shower or bath to something as extensive as renovations which will allow for one-floor living. All such changes, however, come with a price tag. Fortunately, the federal government (and some provincial governments) offer programs to help mitigate that cost.
The federal program – the Home Accessibility Tax Credit (HATC) – allows individuals who own and live in their own homes to claim a non-refundable tax credit equal to 15% of the cost of making permanent changes to their home which will make it more accessible or safer for them to live in.
The HATC is in many ways an unusually flexible and generous tax credit. First, the criteria which determine whether a particular expenditure does or does not qualify for the credit are extremely broad, covering both safety and convenience. Specifically, changes made which meet either of the following criteria can qualify for the HATC. Changes made must:
- allow the individual to gain access to, or be mobile or functional within, the dwelling; or
- reduce the risk of harm to the individual within the dwelling or in gaining access to the dwelling.
Second, there is no requirement for any kind of assessment or certification by a medical professional that a particular kind of change to the home is needed, or is justified by the homeowner’s state of physical ability or disability – such determination is made solely by the owner/resident of the home. Where a homeowner decides that the installation of a railing along a hallway in their home, or a change to a non-slip floor in the bathroom, are necessary for their mobility or safety within the home, then the cost of making those changes can qualify for the credit.
Third, expenses incurred for purposes of the HATC can also be claimed as medical expenses for purposes of the medical expense tax credit. In other words, two different tax credits can be claimed for the same expenditure.
Finally, the credit can be claimed by all “qualifying individuals” meaning anyone who is age 65 or older by the end of the year in which the expenditure is made, or who is eligible for the disability tax credit. There are no income thresholds imposed – the full credit is claimable by any qualifying individual who incurs an eligible expenditure, regardless of their income.
While the eligibility criteria for expenditures under the HATC are very broad, the credit is intended to assist with the cost of changes which become a permanent part of the dwelling, and not those that represent regular maintenance costs or charges for household services. The following types of expenses are specifically not eligible for the HATC:
- amounts paid to acquire a property that can be used independently of the qualifying renovation;
- the cost of annual, recurring, or routine repairs or maintenance;
- amounts paid to buy household appliances;
- amounts paid to buy electronic home-entertainment devices;
- the cost of housekeeping, security monitoring, gardening, outdoor maintenance, or similar services;
- financing costs for the qualifying renovation; or
- the cost of renovation incurred mainly to increase or maintain the value of the dwelling.
In order to qualify for the credit, eligible expenditures must be made to a “housing unit” which is owned and occupied by the person making the claim. That housing unit could be a detached or semi-detached or row house, or a condominium or co-op unit.
Where a qualifying individual (that is, someone who is age 65 or older, or who is eligible for the disability tax credit) lives with and is dependent on another family member (generally, a parent, grandparent, child, grandchild, sibling, aunt, uncle, nephew, or niece) who owns the home in which they both live, that family member can also make a claim for the HATC for changes made to the home to assist their older or disabled relative. For this purpose, such family members are characterized as “eligible individuals”.
Finally, there is a limit on the amount of expenditures which can be claimed for purposes of the HATC, and that limit is $20,000 per year for a particular dwelling. The tax credit claimable is 15% of the eligible expenditure, such that the maximum tax credit which can be claimed is $3,000 per year. The HATC is a non-refundable tax credit, meaning that it can reduce or eliminate federal tax payable, but cannot create or increase a refund. Where the amount of the credit exceeds the tax payable by the qualifying individual and so cannot be fully utilized, the claim can be split between that qualifying individual and any family member who qualifies as an “eligible individual”, as outlined above.
The federal HATC can be claimed by qualifying individuals and eligible individuals who are resident in any province or territory in Canada. Several of those provinces and territories provide similar programs to help offset the cost of incurring such home accessibility changes, but there is unfortunately no uniformity among those programs. Both eligibility criteria (age, income, etc.) and the type of assistance provided (loan, forgiveable loan, refundable or non-refundable tax credits) are different in each province or territory which offers such assistance. However, information on those programs is available on the particular provincial government website, and can usually be found by searching "seniors' home renovations” on those websites.
Detailed information on the federal HATC is available on the federal government website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31285-home-accessibility-expenses.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
In most cases, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences and experiences – a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be being able to claim a tax credit or deduction for the fees paid.
In most cases, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences and experiences – a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be being able to claim a tax credit or deduction for the fees paid.
Unfortunately, while there are some circumstances in which such a deduction can be claimed, those circumstances don’t usually include the routine reasons – purchasing a home, getting a divorce, establishing custody rights, or seeking legal advice about making a will or managing a family estate – for which most Canadians incur legal fees. Generally, personal (as distinct from business-related) legal fees become deductible for most Canadian taxpayers only where they are seeking to recover amounts which they believe are owed to them, particularly where those amounts involved employment or employment-related income or, in some cases, family support obligations.
The first situation in which legal fees paid may be deductible is that of an employee seeking to collect (or to establish a right to collect) salary or wages. In all Canadian provinces and territories, employment standards laws provide that an employee who is about to lose his or her job (for reasons not involving fault on the part of the employee) is entitled to receive a specified amount of notice, or salary or wages equivalent to such notice. In many cases, however, the employee can establish a right to a period of notice (or payment in lieu) greater than the statutory minimum. The amount of notice or payment in lieu of notice which is payable can then become a matter of negotiation between the employer and its former employee, and such negotiations usually involve legal representation and consequently, legal fees. In that situation, legal fees incurred by the employee to establish a right to amounts allegedly owed by the employer are deductible by that former employee. If a court action is necessary and the Court requires the employer to reimburse its former employee for some or all of the legal fees incurred, the amount of that reimbursement must be subtracted from any deduction claimed. In other words, the former employee can claim a deduction only for legal fees which they were personally required to pay in order to collect wages or salary owed and for which they were not reimbursed.
In some situations, an employee or former employee seeks legal help in order to collect or to establish a right to collect a retiring allowance or pension benefits. In such situations, the legal fees incurred can be deducted, up to the total amount of the retiring allowance or pension income actually received for that year (but not including any amounts received which were transferred to the individual’s registered pension plan or registered retirement savings plan). Where the amount of legal fees incurred is greater than the total retiring allowance or pension amount received in the year, the excess can be carried forward and claimed in any of the subsequent seven tax years.
The rules covering the deduction of legal fees incurred where an employee claims amounts from an employer or former employer are relatively straightforward. The same, unfortunately, cannot be said for the rules governing the deductibility of legal fees paid in connection with family support obligations. Those rules have evolved over the years in a somewhat piecemeal fashion – the current rules are as follows.
Legal fees incurred by either party in the course of negotiating a separation agreement or obtaining a divorce are not deductible. Such fees paid to establish child custody or visitation rights are similarly not deductible by either parent.
Where, however, one former spouse has the right to receive support payments from the other, there are circumstances in which legal fees paid in connection with that right are deductible. Specifically, legal fees paid for the following purposes will be deductible by the person receiving those support payments:
- to collect overdue support payments owing;
- to establish the amount of support payments from a current or former spouse or common-law partner;
- to establish the amount of support payments from the legal parent of one’s child (who is not a current or former spouse or common-law partner), but only where that support is payable under the terms of a court order; or
- to try to get an increase in support payments.
As well, the recipient of support payments can deduct legal fees incurred to try to make child support payments non-taxable.
On the payment side of the support payment/receipt equation, the situation is not nearly so favourable, as a deduction for legal fees incurred will not generally not be allowed to a person paying support. More specifically, as outlined on the Canada Revenue Agency (CRA) website, a payer of support cannot claim legal fees incurred to establish, negotiate, or contest the amount of support payments.
Finally, where the Canada Revenue Agency reviews or challenges income amounts, deductions, or credits reported or claimed by a taxpayer for a tax year, any fees paid for advice or assistance in dealing with the CRA’s review, assessment, or reassessment, or in objecting to that assessment or reassessment, can be deducted by the taxpayer. A deduction can similarly be claimed where the taxpayer incurs such fees in relation to a dispute involving employment insurance, the Canada Pension Plan, or the Québec Pension Plan.
Detailed information on the rules which govern the deduction of legal fees incurred is available on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-23200-other-deductions.html#toc2. The specific rules which govern the deductibility of legal fees relating to support obligations are outlined in the CRA publication P102 Support Payments, which can be found on the Agency’s website at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p102.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
By the middle of August, most students who are beginning post-secondary education this fall have hopefully received an offer of admission from their college or university of choice and are in the final stages of planning the move away from the family home for the first time. While deciding where to live and choosing courses for the upcoming fall semester is undoubtedly exciting, the hard reality is that all such choices come with a price tag – sometimes a very steep one. Regardless of geographic location, housing arrangements, or program choices, post-secondary learning is expensive. There will be tuition bills, of course, but also the need to find housing and pay rent in what is, in most college or university locations, a very tight and very expensive rental market. Those who choose to live in a university residence and are able to secure a place will also face bills for accommodation and, usually, a meal plan.
By the middle of August, most students who are beginning post-secondary education this fall have hopefully received an offer of admission from their college or university of choice and are in the final stages of planning the move away from the family home for the first time. While deciding where to live and choosing courses for the upcoming fall semester is undoubtedly exciting, the hard reality is that all such choices come with a price tag – sometimes a very steep one. Regardless of geographic location, housing arrangements, or program choices, post-secondary learning is expensive. There will be tuition bills, of course, but also the need to find housing and pay rent in what is, in most college or university locations, a very tight and very expensive rental market. Those who choose to live in a university residence and are able to secure a place will also face bills for accommodation and, usually, a meal plan.
Fortunately for students (and the parents who are likely footing much of the bill), there are tax credits and benefits which can be claimed to offset such costs: the credits and benefits which can be claimed by post-secondary students (or their spouses, parents, or grandparents) in relation to the upcoming 2024-25 academic year are summarized below.
Tuition fees
A federal tax credit continues to be available for the single largest cost associated with post-secondary education – the cost of tuition. Any student who incurs more than $100 in tuition costs at an eligible post-secondary institution (which would include most Canadian universities and colleges) can claim a non-refundable federal tax credit equal to 15% of such tuition costs. Many of the provinces and territories (excepting Alberta, Ontario, and Saskatchewan) also provide students with an equivalent provincial or territorial credit, with the rate of such credit differing by jurisdiction.
The charges imposed on post-secondary students under the heading of “tuition” include a myriad of costs which may differ, depending on the particular program or institution, and not all of those costs will qualify as “tuition” for purposes of the tuition tax credit. The following specific amounts do, however, constitute eligible tuition fees for purposes of the tuition tax credit:
- Admission fees;
- Charges for use of library or laboratory facilities;
- Exemption fees;
- Examination fees (including re-reading charges);
- Application fees (but only if the student subsequently enrolls in the institution);
- Confirmation fees;
- Charges for a certificate, diploma, or degree;
- Membership or seminar fees that are specifically related to an academic program and its administration;
- Mandatory computer service fees; and
- Academic fees.
The following charges, however, do not constitute tuition fees for purposes of the credit:
- Extracurricular student social activities;
- Medical expenses;
- Transportation and parking;
- Board and lodging;
- Goods of enduring value that are to be retained by students (such as a microscope, uniform, gown, or computer);
- Initiation fees or entrance fees to professional organizations, including examination fees or other fees;
- Administrative penalties incurred when a student withdraws from a program or an institution;
- The cost of books (other than books, compact disks, or similar material included in the cost of a correspondence course); and
- Courses taken for purposes of academic upgrading to allow entry into a university or college program. These courses would usually not qualify for the tuition tax credit as they are not considered to be at the post-secondary school level.
Certain ancillary fees and charges, such as health services fees and athletic fees, may also be eligible tuition fees. However, such fees and charges are limited to $250 unless the fees are required to be paid by all full-time students or by all part-time students.
At both the federal and provincial levels, the credit is a non-refundable one, meaning that it can reduce or eliminate tax otherwise payable, but cannot create or increase a tax refund. Where, as is often the case, a student doesn’t have tax payable for the year because their income isn’t high enough, credits earned can be carried forward and claimed by the student in any future tax year or transferred (within limits) in the current year to be claimed by a spouse, parent, or grandparent.
Rent, food, and other personal and living expenses
Unfortunately, although housing and food costs will take up a very big chunk of each student’s budget, there is not (and never has been) a tax deduction or credit which is claimable for such costs. In all cases, living costs incurred by a post-secondary student (whether on campus or off) are characterized as personal and living expenses, for which no tax deduction or credit is allowed.
Student debt
Most post-secondary students in Canada must incur some amount of debt in order to complete their education, and repayment of that debt is typically not required until after graduation. Once repayment starts, a 15% federal tax credit can be claimed for the amount of interest being paid on such debt, in some circumstances. And, while other types of credits related to post-secondary education (like the tuition tax credit) can be transferred to and claimed by other family members, the student loan interest tax credit can be claimed only by the student – no transfer of the credit is allowed.
Students who are still in school and arranging for loans to finance their education should be mindful of the rules which govern that student loan interest tax credit, since decisions made while still in school with respect to how post-secondary education will be financed can have tax repercussions down the road, after graduation. That’s because while interest paid on a qualifying student loan is eligible for the credit, only some types of student borrowing will qualify for that credit. Specifically, only interest paid on government-sponsored (federal or provincial) student loans will be eligible for the credit. Interest paid on loans of any kind from any financial institution will not.
It’s not uncommon for students (especially students in professional programs, like law or medicine) to be offered lines of credit by a financial institution, often at advantageous or preferential interest rates. As well, financial institutions sometimes offer, once a student has graduated and begun to repay a government-sponsored student loan, to consolidate that student loan with other kinds of debt, also at advantageous interest rates. However, it should be kept in mind that interest paid on that line of credit (or any other kind of borrowing from a financial institution which is used to finance education costs) will never be eligible for the student loan interest tax credit.
As explained in the Canada Revenue Agency publication on the subject: “[I]f you renegotiated your student loan with a bank or another financial institution, or included it in an arrangement to consolidate your loans, you cannot claim this interest amount”. In other words, where a government student loan is combined with other debt and consolidated into a borrowing of any kind from a financial institution, the interest on that government student loan is no longer eligible for the student loan interest tax credit.
Students who are contemplating borrowing from a financial institution rather than getting a government student loan (or considering a consolidation loan which incorporates that government student loan amount) must remember, in evaluating the benefit of any preferential interest rate offered by a financial institution, to take into account the loss of the student loan interest tax credit on that borrowing in future years.
Finally, the federal government announced, in 2023, that interest would no longer be charged on Canada Student Loans, effective as of April 1, 2023 (although graduates are still responsible for any interest which was levied and accumulated prior to that date). Provincial and territorial student loan programs are not affected by the federal announcement and such loans may still be subject to interest charges, depending on the province. Where interest is levied on a loan provided under a government (federal or provincial) student loan program, that interest will be eligible for the student loan interest tax credit, as outlined above.
Other credits and deductions
While the available student-specific deductions and credits are more limited than they were in previous taxation years, there are nonetheless a number of credits and deductions which, while not specifically education-related, are frequently claimed by post-secondary student (for instance, deductions for moving costs). The Canada Revenue Agency publishes a very useful guide which summarizes most of the rules around income and deductions which may apply to post-secondary students. The current version of that guide (which was last updated in May 2024), entitled Students and Income Tax, is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p105.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
During the 2024 calendar year, hundreds of thousands of Canadians will reach their 71st birthday, and a significant percentage of that group are likely to have saved money for retirement through a registered retirement savings plan (RRSP). Every one of those individuals, whether they are retired, partly retired, or still in the work force, and regardless of the amount of savings accumulated in their RRSPs, will be required, by the end of the calendar year, to make a decision on how to structure and invest their retirement income for the remainder of their lives.
During the 2024 calendar year, hundreds of thousands of Canadians will reach their 71st birthday, and a significant percentage of that group are likely to have saved money for retirement through a registered retirement savings plan (RRSP). Every one of those individuals, whether they are retired, partly retired, or still in the work force, and regardless of the amount of savings accumulated in their RRSPs, will be required, by the end of the calendar year, to make a decision on how to structure and invest their retirement income for the remainder of their lives.
The need to make that decision arises from the rule that all taxpayers who hold funds within an RRSP are required to collapse that RRSP by the end of the calendar year in which they turn 71 years of age – no exceptions and no extensions. It’s a very significant decision, as the course of action chosen will affect the individual’s income for the remainder of their life and, in some cases, actions taken cannot be undone.
While the actual decision is a complex one, the options available to a taxpayer who must collapse an RRSP are actually quite few in number – three, to be exact. They are as follows:
- Collapse the RRSP and include all of the proceeds in income for that year;
- Collapse the RRSP and transfer all proceeds to a registered retirement income fund (RRIF); and/or
- Collapse the RRSP and purchase an annuity with the proceeds.
It’s not hard to see that the first option doesn’t have much to recommend it. Collapsing an RRSP without transferring the balance to a RRIF or using that amount to purchase an annuity means that every dollar in the RRSP will be treated as taxable income for that year. In some cases, where a substantial six figure amount has been saved in the RRSP, that can mean losing nearly half of the RRSP proceeds to income tax. And, while any balance of proceeds left can then be invested, tax will be payable on all investment income subsequently earned.
As a practical matter, then, the choices come down to two: an RRIF or an annuity. And, as is the case with most tax and financial planning decisions, the best choice will be driven by one’s personal financial and family circumstances, risk tolerance, cost of living, and the availability of other sources of income to meet such living costs.
The annuity route has the great advantages of simplicity and reliability. In exchange for a lump-sum amount paid by the taxpayer, the issuer of the annuity agrees to pay the taxpayer a specific sum of money, usually once a month, for the remainder of their life. Annuities can also provide a guarantee period, in which the annuity payments continue for a specified time period (five years, 10 years), even if the taxpayer dies during that time. Finally, annuities can be set up as joint annuities, in which annuity payments will continue until the death of the last annuitant – such joint annuities are most often purchased by spouses. Regardless of how the annuity is structured, the amount of monthly income which can be received is determined by the amount used to purchase the annuity, and also by the gender and, especially, the age of the annuity purchaser(s).
The other factor influencing the amount of income which can be received from an annuity is the interest rates which prevail at the time the annuity is purchased. Between 2009 and 2022, interest rates were so low that an annuity purchase had very little to recommend it. Beginning in early 2022, however, the Bank of Canada increased its benchmark rate several times, and annuity payment rates increased as a result. Currently (as of July 2, 2024) annuity rates for each $100,000 paid to the annuity issuer by a taxpayer who is 70 years of age range from $630 to $662 per month for a male taxpayer and from $574 to $613 for a female taxpayer (the actual rate is set by the company which issues the annuity, and will differ slightly from company to company). Those rates do not include any guarantee period.
For taxpayers whose primary objective is to obtain a guaranteed life-long income stream without the responsibility of making any investment decisions or the need to take any investment risk, an annuity can be an attractive option. There are, however, some potential downsides to be considered. First, an annuity can never be reversed. Once the taxpayer has signed the annuity contract and transferred the funds, they are locked into that annuity arrangement for the remainder of their life, regardless of any change in circumstances that might mean an annuity is no longer suitable. Second, unless the annuity contract includes a guarantee period or is structured as a joint annuity, there is no way of knowing how many payments the taxpayer will receive. If they die within a short period of time after the annuity is put in place, there is usually no refund of amounts invested – once the initial transfer is made at the time the annuity is purchased, all funds transferred belong to the annuity company. Third, most annuity payment schedules do not keep up with inflation – while it is possible to obtain an annuity in which payments are indexed, having that feature will mean a substantially lower monthly payout amount. Finally, where the amount paid to obtain the annuity represents most or all of the taxpayer’s assets, entering into the annuity arrangement means that the taxpayer will not be leaving an estate for his or heirs.
The second option open to taxpayers is to collapse the RRSP and transfer the entire balance to a registered retirement income fund, or RRIF. An RRIF operates in much the same way as an RRSP, with two major differences. First, it’s not possible to contribute funds to an RRIF. Second, the taxpayer is required to withdraw an amount from their RRIF (and to pay tax on that amount) each year. That minimum withdrawal amount is a percentage of the outstanding balance, with that percentage figure determined by the taxpayer’s age at the beginning of the year. While the taxpayer can always withdraw more in a year (and pay tax on that withdrawal), they cannot withdraw less than the minimum required withdrawal for their age group.
Where a taxpayer holds savings in an RRIF, they can invest those funds in the same investment vehicles that were used while the funds were held in an RRSP. And, as with an RRSP, investment income earned by funds held inside an RRIF are not taxed as they are earned. While the ability to continue holding investments that can grow on a tax-sheltered basis provides the taxpayer with a lot of flexibility, that flexibility has a price in the form of investment risk. As is the case with all investments, investments held within an RRIF can increase in value – or decrease – and the taxpayer carries the entire investment risk. When things go the way every investor wants them to, investment income is earned while the taxpayer’s underlying capital is maintained, but that result is never guaranteed.
On the death of an RRIF annuitant, any funds remaining in the RRIF can pass to the RRSP or RRIF of the annuitant’s spouse on a tax-free basis. Where there is no spouse, the balance of funds in the RRIF will be treated, for tax purposes, as income to the RRIF annuitant in the year of death, and must be reported as income on the tax return for the year of death.
While the above discussion of RRIFs versus annuities focuses on the benefits and downsides of each, it’s not necessary – and in most cases not advisable – to limit the options to an either/or choice. It is possible to achieve, to a degree, the seemingly irreconcilable goals of lifetime income security and capital (and estate) growth. Combining the two alternatives – annuity and RRIF – either now or in the future can go a long way toward satisfying both objectives.
For everyone, whether in retirement or not, spending is a combination of non-discretionary and discretionary items. The first category is made up mostly of expenditures for income tax, housing (whether rent or the cost of maintaining a house), food, insurance costs, and (especially for older Canadians) the cost of out-of-pocket medical expenses. The second category of discretionary expenses includes entertainment, travel, and the cost of any hobbies or interests pursued. A strategy which utilizes a portion of RRSP savings to create a secure lifelong income stream to cover non-discretionary costs can remove the worry of outliving one’s money, while the balance of savings can be invested for growth and to provide the income for non-discretionary spending.
Such a secure income stream to cover non-discretionary expenses can, of course, be created by purchasing an annuity. As well, although most taxpayers don’t think of them in that way, the Canada Pension Plan (CPP) and Old Age Security (OAS) have many of the attributes of an annuity, with the added benefit that both are indexed to inflation. By age 71, all taxpayers who are eligible for CPP and OAS will have begun receiving those monthly benefits. Consequently, in making the RRIF/annuity decision at that age, taxpayers should include in their calculations the extent to which CPP and OAS benefits will pay for their non-discretionary living costs.
As of July 2024, the maximum OAS benefit for most Canadians (specifically, those who have lived in Canada for 40 years after the age of 18) is about $718 ($790 for those aged 75 and older) per month. The amount of CPP benefits receivable by the taxpayer will vary, depending on their work history, but the maximum current benefit which can be received at age 65 is about $1,365. As a result, a single taxpayer who receives the maximum CPP and OAS benefits at age 65 will have $25,000 in annual income ($2,083 per month). And, for a married couple, of course, the total annual income received from CPP and OAS can be about $50,000 annually, or $4,166 per month. While $25,000 a year isn’t usually enough to provide a comfortable retirement, for those who go into retirement in good financial shape – meaning, generally, without any debt – it can go a long way toward meeting non-discretionary living costs. In other words, most Canadians who are facing the annuity versus RRIF decision already have a source of income which is effectively guaranteed for their lifetime and which is indexed to inflation. Taxpayers who are considering the purchase of an annuity to create the income stream required to cover non-discretionary expenses should first determine how much of those expenses can already be met by the combination of their (and their spouse’s) CPP and OAS benefits. The amount of any needed annuity purchase can then be set to cover off any shortfall.
While the options available to a taxpayer at age 71 with respect to the structuring of future retirement income are relatively straightforward, the number of factors to be considered in assessing those factors and making that decision are not. All of that makes for a situation in which consulting with an independent financial advisor on the right mix of choices and investments isn’t just a good idea, it’s a necessary one.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most Canadians contemplate retirement with a mixture of anticipation and trepidation. While the benefits of an end to the day-to-day grind of work and commuting (while also having more free time to spend with family and friends) are undeniable, giving up a regular paycheque also means experiencing a degree of financial anxiety. For the majority of Canadians who are not members of a defined benefit pension plan, the overriding concern is how to manage retirement savings in a way that will generate sufficient income to provide a comfortable retirement, while still ensuring that accrued savings will last the remainder of one’s life. How, in other words, to avoid the dismal prospect of outliving one’s savings, or spending too much early in retirement and being left with insufficient income to meet one’s expenses late in life? And, of course, it’s impossible to find a definitive answer to that question, since none of us knows what the future holds, in terms of either health or longevity.
Most Canadians contemplate retirement with a mixture of anticipation and trepidation. While the benefits of an end to the day-to-day grind of work and commuting (while also having more free time to spend with family and friends) are undeniable, giving up a regular paycheque also means experiencing a degree of financial anxiety. For the majority of Canadians who are not members of a defined benefit pension plan, the overriding concern is how to manage retirement savings in a way that will generate sufficient income to provide a comfortable retirement, while still ensuring that accrued savings will last the remainder of one’s life. How, in other words, to avoid the dismal prospect of outliving one’s savings, or spending too much early in retirement and being left with insufficient income to meet one’s expenses late in life? And, of course, it’s impossible to find a definitive answer to that question, since none of us knows what the future holds, in terms of either health or longevity.
Typically, expenses are higher early in retirement, when retirees are likely to be healthier and more active, and retirement plans may include travel and the pursuit of hobbies and interests. However, while such activities and their associated costs likely dwindle as retirees age, other types of expenses come into play – especially expenses related to the need to pay for medical costs, household and personal services, and, ultimately, the prospect of paying for personal and/or medical care in an assisted living facility. The prospect of such future costs can make retirees reluctant to spend accrued savings (or annuity income), out of concern that such funds will be needed in the future to pay for care.
The worry about reaching an age where some degree of care is required (and must be paid for) is an entirely realistic one for retirees. According to Statistics Canada’s figures, the average Canadian who has reached the age of 75 has a life expectancy of another 12 years. And, since that figure represents an average, a significant number of 75-year-olds can expect to live longer than that. Again, according to StatsCan figures, in 2023 there were over 896,000 Canadians aged 85 or older.
With all of these demographic and financial realities in mind, a new kind of annuity – the advanced life deferred annuity, or ALDA – was created in 2019 and is now available to Canadians in the annuities marketplace. As is the case with all annuities, the issuer of an ALDA agrees, in exchange for receiving a specified lump sum amount, to provide an annual income of a specified amount to the annuitant. The difference, however, is while an ALDA can be taken out at any time, payments under the ALDA can be deferred to as late as the end of the year in which the annuitant turns 85.
For example, a retiree who turns 71 in 2024 and who has accumulated $500,000 in retirement savings could transfer $400,000 from his or her RRSP to an RRIF, and use the remaining $100,000 to purchase an ALDA, under which payments would begin at age 85. The retiree now has the security of knowing that the $400,000 held in the RRIF (plus any additional amounts earned from investment returns) doesn’t need to last for the unknown number of years remaining in their life, but instead for a specified period of time (in this case, 14 years), at which time the income stream from the ALDA will begin, to augment or replace the income from the RRIF.
There is a limit on the amount which can be used to purchase an ALDA. That limit is 25% of the amount held in an individual’s RRSP or RRIF, to a lifetime maximum. That lifetime maximum is indexed to inflation and stands at $170,000 for 2024. Taking the example outlined above, the retiree who has accumulated $500,000 in RRSP savings would be using 20% of that amount (or $100,000) to purchase the ALDA, and would be safely under the $170,000 lifetime limit.
While the security provided by such a retirement income structure would certainly be welcome to most retirees, the obvious concern where payments under an annuity are deferred is the possibility that the annuitant won’t live long enough to collect those payments, and that the funds expended to purchase the ALDA will effectively be wasted. There are two options to address that (legitimate) concern. First, an ALDA can be structured as a “joint-life” contract, under which payments will be made to the surviving annuitant (most often the spouse of the ALDA purchaser) for the remainder of their life. It’s also possible to structure the ALDA to provide for a lump sum death benefit to be paid to a beneficiary or beneficiaries (for example, the annuitant’s children) on the death of the annuitant. That death benefit can be any amount up to the amount of the original ALDA purchase, minus any amounts already paid out to the original annuitant. So if the original ALDA purchase was for $100,000 and $25,000 in benefits under the ALDA were paid out prior to the death of the original annuitant, the maximum death benefit amount would be $75,000.
Being able to have certainty of income for one’s very old age is a major benefit of purchasing an ALDA. There is, however, another benefit to be obtained, and that is income and tax deferral.
All Canadians who hold savings in an RRSP must collapse that RRSP by the end of the year in which they turn 71 and, in most instances, such individuals open an RRIF and transfer funds held in the RRSP to that RRIF. Once funds are held in an RRIF, a specified percentage of those funds must be paid out in each year to the RRIF holder. All such withdrawals constitute taxable income to the holder of the RRIF, and that taxable income can affect the RRIF holder’s eligibility for certain tax credits and benefits, like the age credit, Old Age Security benefits, and the GST/HST tax credit. Even if the RRIF holder does not actually need the total amount which must be withdrawn, there is no option to withdraw a lesser amount, and all funds withdrawn are treated as taxable income which can affect eligibility for tax credits and benefit – with no exceptions.
Where an RRIF holder purchases an ALDA, the amount used for that purchase is no longer included in the total balance on which the calculation of required RRIF withdrawals is based. Continuing the above example, if the RRIF holder used $100,000 of their retirement savings to purchase the ALDA, the amount which they would subsequently be required to withdraw from the RRIF each year would be calculated as a percentage of the remaining $400,000 – not the $500,000 which was held in the RRIF prior to the purchase of the ALDA. Both the RRIF holder’s required income and their tax payable for the year will therefore be lower, and the loss of partial or full eligibility for tax credits and benefits will be less likely.
As is the case with most annuities, the terms of an ALDA (purchase amount, single vs. joint annuity, existence of a death benefit, age at which the income stream begins) are up to the ALDA purchaser and the issuer, as long as the basic tax rules governing such plans are adhered to. Everyone’s financial, health, and tax circumstances are different and, as is the case with any retirement income plan, those particular circumstances will drive the decisions made on the best retirement income structure for that individual. Purchasing an ALDA may be the right approach for some retirees, but not for others – but for everyone, having that option adds another element of flexibility to retirement income planning.
More information on ALDAs can be found on the federal government website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/alda.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
By the time summer arrives, nearly all Canadians have filed their income tax returns for the previous year, have received a Notice of Assessment from the tax authorities with respect to that return, and have either received their tax refund or, more grudgingly, paid any balance of tax owing.
By the time summer arrives, nearly all Canadians have filed their income tax returns for the previous year, have received a Notice of Assessment from the tax authorities with respect to that return, and have either received their tax refund or, more grudgingly, paid any balance of tax owing.
It’s a surprise, therefore, when unexpected mail arrives from the Canada Revenue Agency (usually in mid- to late July), and the information in that mail will likely be both unfamiliar and unwelcome. Specifically, the enclosed Instalment Reminder form will advise the recipient that, in the view of the CRA, they should make instalment payments of income tax on September 15 and December 15 of 2024 – and will helpfully identify the amounts which should be paid on each date.
No one particularly likes receiving unexpected mail from the tax authorities, and correspondence which suggests that the recipient should be making payments of income tax for 2024 to the CRA during the year (instead of when they file the return for 2024 in April 2025) is likely to be both perplexing and somewhat alarming. It’s fair to say that most Canadians aren’t familiar with the payment of income tax by instalments, and are therefore at a loss to know how to proceed the first time they receive an Instalment Reminder.
The reason that the instalment payment system is unfamiliar to most Canadians is that most of us pay income taxes during our working lives through a different system. Every Canadian employee has tax automatically deducted from their paycheque (“at source”), before that paycheque is issued, and that tax is remitted by the employer to the CRA on the employee’s behalf. Such deductions and remittances accrue to the employee’s benefit, and they are credited with those remittances when filing the annual tax return for that year. It’s an efficient system, but it’s also one which is largely invisible to the employee, and certainly one which operates without the need for the employee to take any steps on their own.
Where an individual is no longer an employee – for instance, they start a business and become self-employed, or retire and begin to receive retirement income from various government and non-government sources – such deductions and remittances are no longer automatically made. However, Canadian tax rules provide that, where the amount of tax owed when a return is filed by the taxpayer is more than $3,000 ($1,800 for Québec residents) in the current (2024) year and either of the two previous (2022 and 2023) years, that taxpayer may be subject to the requirement to pay income tax by instalments.
The reason that first instalment reminders are issued in August has to do with the schedule on which Canadians file their tax returns. The amount of tax payable on filing for the immediately preceding year can’t be known until the tax return for that year has been filed and assessed, and the tax return filing deadline for individuals is April 30 (or June 15 for self-employed taxpayers and their spouses). Consequently, by the middle of July, the CRA will have the information needed to determine whether a particular taxpayer should receive a first instalment reminder for the current year.
Taxpayers who receive that first Instalment Reminder in July may also be puzzled by the fact that it is a “Reminder” and not a “Requirement” to pay. The reason for that is that those who receive it are not actually required by law to make instalment payments of tax. There are, in fact, three options open to the taxpayer who receives an Instalment Reminder.
First, the taxpayer can pay the amounts specified on the Reminder, by the respective due dates of September 15 and December 15. A taxpayer who does so can be certain that they will not have to pay any interest or penalty charges even if they have to pay an additional amount on filing in the spring of 2024. If the instalments paid turn out to be more than the taxpayer’s tax liability for 2024, they will of course receive a refund on filing.
Second, the taxpayer can make instalment payments based on the total amount of tax which was owed and paid for the 2023 tax year (including any balance that was owed on filing). If a taxpayer’s income has not changed between 2023 and 2024 and their available deductions and credits remain the same, the likelihood is that total tax liability for 2024 will be slightly less than it was in 2023, owing to the indexation of tax brackets and tax credit amounts.
Third, the taxpayer can estimate the amount of tax which they will actually owe for 2024 and can pay instalments based on that estimate. Where a taxpayer’s income has dropped from 2023 to 2024 and there will consequently be a reduction in tax payable, this option may be worth considering. Taxpayers who wish to pursue this approach can obtain the information needed to estimate current year taxes (federal and provincial tax brackets and rates) on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html#federal.
All of this may seem like a lot of research and calculation effort, especially when one considers that many Canadians don’t even prepare their own tax returns. And those who don’t want to be bothered with the intricacies of tax calculations can pay the amounts set out in the Instalment Reminder, secure in the knowledge that they will not incur any penalty or interest charges and that, should those amounts ultimately represent an overpayment of taxes, that overpayment will be recovered and refunded when the return for 2024 is filed next spring.
Once they have resigned themselves to the realities of the tax instalment system, the next question that most taxpayers have is how such payments can be made. The options open to taxpayers in that regard, as well as general information on the tax instalment system, are outlined on the Canada Revenue Agency website at Required tax instalments for individuals - Payments for individuals - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
By this time of the year, virtually all Canadian residents have filed their income tax return for 2023 and have received the Notice of Assessment issued by the Canada Revenue Agency (CRA) with respect to that tax filing. Most taxpayers, therefore, would consider that their annual filing and payment obligations are done and behind them for another year.
By this time of the year, virtually all Canadian residents have filed their income tax return for 2023 and have received the Notice of Assessment issued by the Canada Revenue Agency (CRA) with respect to that tax filing. Most taxpayers, therefore, would consider that their annual filing and payment obligations are done and behind them for another year.
It can, therefore, be a little surprising to receive a communication from the CRA in mid-summer and more than a little unsettling to find out that the Agency has some further questions about the tax return that the taxpayer thought was already completed. Notwithstanding, that’s an experience that millions of taxpayers will have over the next few weeks and months.
Between February 5 and June 24 of this year, the Canada Revenue Agency received and processed more than 30 million individual income tax returns filed for the 2023 tax year, and issued a Notice of Assessment in respect of each one of those returns. The sheer volume of returns and the processing turnaround timelines mean that the CRA does not (and could not possibly) do a manual review of the information provided in a return prior to issuing the Notice of Assessment. Rather, returns are scanned by the Agency’s computer system and a Notice of Assessment is then issued.
In addition, the CRA has, for many years, been successful in encouraging taxpayers to fulfill their filing obligations online, through one of the Agency’s electronic filing services. This year, just under 29 million (or 93%) of individual returns for 2023 were filed by electronic means. While e-filing means that the turnaround for processing of returns is much quicker, there is, by definition, no paper involved.
The Canadian tax system has always been what is termed a “self-assessing” system, in which taxpayers report income earned and claim deductions and credits to which they believe they are entitled. Prior to the advent of e-filing there were means by which the CRA could easily verify claims made by taxpayers. Where returns were paper-filed, taxpayers were usually required to include receipts or other documentation to prove their claims, whatever those claims were for. For the 93% of returns which were filed this year by electronic means, no such paper trail exists. Consequently, the potential exists for misrepresentation of such claims (or simple reporting errors) on a large scale.
The CRA’s response to that risk is to conduct a wide range of review programs, some of them carried out before a Notice of Assessment is issued for the taxpayer’s return, and others after that Notice of Assessment has been issued and sent to the taxpayer. Regardless of the timing, in all cases the purpose of the review is to obtain from the taxpayer the information or documentation needed to support claims for deductions or credits made by the taxpayer on the return. The CRA also administers a Matching Program, in which information reported on the taxpayer’s return (both income and deductions) is compared to information provided to the CRA by third-party sources (like T4s filed by employers or T5s filed by banks or other financial institutions).
Being selected for review under either program means, for the individual taxpayer, the possibility of receiving unexpected correspondence, or a telephone call, from the CRA. Receiving such correspondence or such a call from the tax authorities is almost guaranteed to unsettle the recipient taxpayer, who may immediately conclude that he or she has done something very wrong and is facing a big tax bill. However, in the vast majority of cases, the contact is just a routine part of the Agency’s processing review mandate.
Where the initial contact from the CRA to the taxpayer is done by telephone, it’s important that the taxpayer verify the identity of the person claiming to be a representative of the Agency. As virtually everyone knows by now, fraudulent or “scam” calls purporting to be from the CRA have become commonplace. To assist taxpayers in confirming that any telephone contact received is a legitimate one, the CRA has provided information on how to respond to such a call; that information can be found on the CRA website at Verify it's the CRA calling - Scams and fraud - CRA - Canada.ca.
A taxpayer whose return is selected as part of a processing review program will be asked to provide verification or proof of deductions or credits claimed on the return –usually by way of receipts or similar documentation. Or, where figures which appear on an information slip – for instance, the amount of interest income earned – don’t match up with the amount of such interest income reported by the taxpayer, they will be contacted to provide an explanation of the discrepancy.
Of course, most taxpayers are not concerned so much with the kind of program or programs under which they are contacted as they are with why their return was singled out for review or follow-up. Many taxpayers assume that it’s because there is something wrong on their return, or that the letter is the start of a tax audit process, but that’s not necessarily the case. Returns are selected by the CRA for pre- or post-assessment review for a number of reasons. Canada’s tax laws are complex and, over the years, there are areas in which the CRA has determined that taxpayers are more likely to make errors on their return. Consequently, a return which includes claims in those areas (like dependant tax credit claims, or claims for medical expenses, moving expenses, or tuition tax credits) may have an increased chance of being reviewed. Where there are deductions or credits claimed by the taxpayer which are significantly different or greater than those claimed in previous returns, that could flag the return for review. And, if the taxpayer’s return has been reviewed in previous years, and especially if an adjustment was made following that review, subsequent reviews may be more likely. Finally, many returns are picked for the processing review programs simply on the basis of random selection.
Regardless of the reason for the follow-up, the process is the same. Taxpayers whose returns are selected for review will be contacted by the CRA, usually by letter, identifying the deduction or credit for which the CRA wants documentation or the income or deduction amount about which a discrepancy seems to exist. The taxpayer will be given a reasonable period of time – usually a few weeks from the date of the letter – in which to respond to the CRA’s request. That response should be in writing, attaching, if needed, the receipts or other documentation which the CRA has requested. All correspondence from the CRA under its review programs will include a reference number, which is usually found in the top right-hand corner of the CRA’s letter. That number is the means by which the CRA tracks the particular inquiry, and should be included in the response sent to the Agency. It’s important to remember, as well, that it’s the taxpayer’s responsibility to provide proof, where requested, of any claims made on a return. Where a taxpayer does not respond to a CRA request or does not provide such proof, the Agency will proceed on the basis that the requested verification or proof does not exist and will assess or reassess accordingly.
Taxpayers who have registered for the CRA’s online tax program My Account (or whose representative is similarly registered for the Agency’s Represent a Client online service) can usually submit required documentation electronically. More information on how to do so can be found on the CRA website at Submitting documents online – Pre-assessment Review, Processing Review and Request Verification Programs - Canada.ca.
Whatever the reason a particular return was selected for review by the CRA, one thing is certain: a prompt response to the CRA’s enquiry, providing the Agency with the information or documentation requested, will, in the vast majority of cases, bring the matter to a speedy conclusion, to the satisfaction of both the Agency and the taxpayer. The CRA website also includes more detailed information on the return review process, which is available at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/review-your-tax-return-cra.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most Canadians, understandably, think of our income tax system as a government “program” that takes money out of their paycheques and out of their pockets. And, while it’s certainly true that virtually every Canadian who earns an income must allocate a portion of that income to paying federal and provincial personal income taxes, that’s not the whole picture. Our tax system does, in fact, provide Canadians with a number of direct benefits, through a variety of tax credit and benefit programs which actually put money into the hands of Canadians. And when that money can be obtained with minimal effort (and be received tax-free) it’s a win-win for the recipient.
Most Canadians, understandably, think of our income tax system as a government “program” that takes money out of their paycheques and out of their pockets. And, while it’s certainly true that virtually every Canadian who earns an income must allocate a portion of that income to paying federal and provincial personal income taxes, that’s not the whole picture. Our tax system does, in fact, provide Canadians with a number of direct benefits, through a variety of tax credit and benefit programs which actually put money into the hands of Canadians. And when that money can be obtained with minimal effort (and be received tax-free) it’s a win-win for the recipient.
Those attributes describe the basic child and family benefits paid by the federal government to eligible Canadians every month of the year. However, a substantial number of eligible recipients don’t receive benefits to which they are entitled, simply because they haven’t claimed them, leaving potentially hundreds or thousands of dollars in tax-free income “on the table” each year. As well, many Canadians who do receive such benefits but who then fail to claim them annually can see their benefit payments stop, even though they remain eligible to receive those benefits.
While there are quite a number of such benefits, the process of “claiming” each of them is the same – simply filing a tax return each year. Eligibility for some (but not all) of the obtainable benefits and/or the amount of benefit obtainable is based, in part, on the income of the recipient. When each Canadian files a tax return, the Canada Revenue Agency determines, based on the information provided in that return, the benefits to which the taxpayer is entitled and in what amounts. Where the amount of a taxpayer’s income is relevant to the determination of eligibility, the income figure used is that from the previous year. In other words, a taxpayer’s eligibility for benefits during the 2024-25 benefit year is based on their income for 2023. And that information was provided to the Canada Revenue Agency on the tax returns for 2023 which were filed by taxpayers earlier this year.
Once the CRA receives the needed income information (usually by April 30, 2024) and determines a taxpayer’s benefit eligibility, those benefits are paid to eligible recipients throughout the 2024-25 benefit year, which starts on July 1, 2024 and ends on June 30, 2025.
It should be noted, as well, that while the federal government refers to these benefits under the umbrella term “child and family benefits”, it’s wrong to conclude that benefits are only available to parents and/or married individuals. Of the four benefit programs outlined below which will be in place during the upcoming benefit year, only the Canada Child Benefit program requires that a taxpayer be a parent, and none of the benefit programs require that a taxpayer be married or in a common-law relationship.
GST/HST Credit
The GST/HST credit is a non-taxable amount paid four times a year (on the 5th of July, October, January, and April) to lower and middle-income individuals and families, to help offset the goods and services tax/harmonized sales tax (GST/HST) that they pay. Generally, the credit is available to Canadian residents who meet any one of the following criteria:
- aged 19 yearsof age or older;
- have or had a spouse or common law partner; or
- are or were a parent and live (or lived) with their child.
The amount of benefit which may be received is determined by both family size and income level. For the upcoming (July 2024 to June 2025) benefit year, the maximum annual GST/HST benefit is as follows:
- $519 if you are single;
- $680 if you are married or have a common-law partner; and
- $179 for each child under the age of 19.
The CRA website includes a chart showing the amount of GST/HST benefit which is provided at different income levels, to individuals and to families of different sizes and compositions. That chart can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/goods-services-tax-harmonized-sales-tax-gst-hst-credit/goods-services-tax-harmonised-sales-tax-credit-payments-chart.html.
Eligibility for the GST/HST credit for the 2024-25 benefit year is determined automatically by the CRA for each taxpayer who filed a return for 2023. There is, therefore, no need to indicate on the return that the taxpayer is applying for the GST/HST credit.
Canada Carbon Rebate
Unlike the other three credits which are based, at least in part, on household income, the Canada Carbon Rebate, or CCR (formerly known as the Climate Action Incentive Payment), is a flat rate, non-taxable credit paid to eligible residents living in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, or Saskatchewan. The purpose of the CCR is to help offset the financial impact of the federal carbon tax, with the amount of the annual benefit determined by the taxpayer’s province of residence and family composition. An online tool allowing taxpayers to estimate the amount of CCR they may receive can be found on the CRA website at How much you can get - Canada Carbon Rebate (CCR) for individuals - Canada.ca.
In addition to living in one of these provinces, recipients must also satisfy the same eligibility criteria as for the GST/HST credit, in that they must be Canadian residents who are at least 19 years of age, or have or had a spouse or common-law partner, or are or were a parent and lives or lived with their child.
The CCR (for all provinces) includes a rural supplement of the base amount for residents of small and rural communities. That supplement, which was set at 10% of the base amount in previous years, has been increased to 20% for the 2024-25 benefit year. While there is no need to apply for the CCR when filing a tax return, individuals who believe they are eligible for the rural supplement need to ensure that they tick the applicable box on page 2 of the return to indicate their eligibility. That requirement does not apply to residents of Prince Edward Island, where all CCR recipients are eligible for the rural supplement.
The CCR is paid in quarterly instalments, meaning that during the 2024-25 benefit year, payments will be made to eligible Canadians on the 15th day of April, July, October, and January.
More information on the CCR can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/cai-payment.html.
Canada Workers Benefit
The Canada Workers Benefit (CWB) is a refundable tax credit paid to lower-income Canadian residents who are aged 19 or older or are married or have a common-law spouse or a child with whom they live, and who have “working income” earned from employment or self-employment.
The amount of CWB which an individual or family can receive depends on marital status and net income. The basic amounts payable, and the net income levels at which eligibility for that basic benefit is eroded, are as follows.
- $1,518 for single individuals
The single individual benefit is reduced if adjusted net income is more than $24,975. No basic amount is payable if the applicant’s adjusted net income is more than $35,095. - $2,616 for families
The family benefit amount is reduced if adjusted family net income is more than $28,494. No basic amount is payable where adjusted family net income is more than $45,934.
In order to apply for the CWB, a recipient must file their tax return electronically and follow the software instructions for applying or, if filing a paper return, must complete and file a Schedule 6 with that tax return.
More detailed information on the CWB can be found at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-workers-benefit.html.
Canada Child Benefit
The Canada child benefit (CCB) is a tax-free monthly payment made to eligible families to help with the cost of raising children under 18 years of age. The CCB is paid to the parent who is primarily responsible for the care and upbringing of the child or children, and the amount varies with the age and number of children.
The CCB is also a means-tested benefit, with the benefit amount being reduced as family net income increases. CCB amounts paid during the 2024-25 benefit year are based on family net income for 2023.
The maximum amounts payable for the benefit year running from July 2024 to June 2025 are as follows.
For each child:
- under 6 years of age: $7,787 per year ($648.91 per month)
- 6 to 17 years of age: $6,570 per year ($547.50 per month)
Where family net income for 2023 is less than $36,502, recipients will receive the maximum amount outlined above for 2024-25, with no reductions.
Individuals and families who may be eligible for the CCB will have their eligibility automatically assessed when they file their tax return for 2023: there is no requirement to file a particular schedule or other application. More information on the CCB is available on the federal government website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html.
While the number and variety of federal child and family benefits and the varying eligibility criteria for each can be confusing, the necessary determinations and calculations are done by the federal government. The only step which need be taken by an individual is the filing of an annual tax return. Taxpayers who wish to find information on the benefits for which they may be eligible can refer to the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits.html, where detailed information on each such benefit, the eligibility criteria, and amounts which may be received are summarized.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
They can be accessed below.
Corporate:
Personal:
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The Canadian tax system is a “self-assessing” one, in which taxpayers are expected (and, in most cases, required) to file an individual income tax return each spring. On that return the taxpayer provides a summary of income earned during the previous calendar year and claims available deductions and credits. Those calculations determine the amount of tax owed for the year and any amount owed must then, of course, be paid on or before April 30.
The Canadian tax system is a “self-assessing” one, in which taxpayers are expected (and, in most cases, required) to file an individual income tax return each spring. On that return the taxpayer provides a summary of income earned during the previous calendar year and claims available deductions and credits. Those calculations determine the amount of tax owed for the year and any amount owed must then, of course, be paid on or before April 30.
Although the percentage of taxpayers who are required to file a return but do not do so is relatively small, a percentage as low as 1% of non-filers in a population of 40 million can still amount to nearly 400,000 required returns not filed. There are a number of reasons why taxpayers don’t file a return – sometimes it’s just procrastination, or a lack of knowledge of how and when to get the return filed. In other cases, taxpayers don’t believe that they are required to file a return – for instance, where they have little or no income for the year.
However, in the majority of instances in which taxpayers don’t file a return, it’s likely because taxes are owed and they are unable to pay those taxes on time or in full – or at all. In such situations, it’s tempting to conclude that it’s better not to file in the hope, perhaps, that the CRA will overlook or somehow not notice the delinquency. That’s not, however, a realistic conclusion. Where a Canadian resident earns income, the payor of that income must file an income slip (T4 for employment income, T5 for interest income, etc.) with the Canada Revenue Agency, on which the recipient of that income is identified by name, address, and social insurance number. Where those slips don’t match up with income reported on a return for the year by the taxpayer, the omission will probably come to light.
Although each such instance of non-compliance represents lost revenue to the Canadian government, the resources needed to track down each and every instance of non-compliance simply aren’t available, especially since in many cases the amount recovered may be less than the costs which must be incurred to recover that amount.
With all of that in mind, the Canada Revenue Agency instituted a program – the Voluntary Disclosures Program (VDP) – intended to encourage non-compliant taxpayers to come forward and put their tax affairs in order. The incentive to do so arises from the fact that in most cases, while taxpayers who participate in the VDP program have to pay outstanding tax amounts owed, plus some interest, they can avoid both other interest charges, some penalties which would normally be imposed, and the risk of criminal prosecution.
To qualify for such relief under the VDP, an application made with respect to non-compliance with income tax filing and payment obligations must:
- be voluntary (meaning that it is done before the CRA initiates any enforcement action related to the information to be disclosed);
- be complete (that is, includes all relevant information and documentation);
- involve the application or potential application of a penalty;
- include information that is at least one year or one reporting period past due; and
- include payment of the estimated tax owing (taxpayers who are unable to do so can request a payment arrangement).
The VDP program includes two separate “tracks” for income tax disclosures – the Limited Program and the General Program – and the kind and extent of relief available depends on the track to which a particular application is assigned.
While the Canada Revenue Agency will ultimately make the determination of whether an application should proceed under the Limited or the General Program on a case-by-case basis, there are guidelines in place. The CRA’s intention is to restrict the Limited Program to instances in which taxpayers intentionally avoided their tax obligations (as distinct from inadvertence), or there is conduct on the part of the taxpayer which amounts to gross negligence. In making its determination of the appropriate track for a disclosure, the factors which the CRA will consider include the following:
- the dollar amounts involved;
- the number of years of non-compliance;
- the sophistication of the taxpayer;
- how quickly the taxpayer acted to correct their non-compliance after becoming aware of it;
- whether the disclosure was made after the taxpayer became aware of the CRA’s intended specific focus on that particular area of taxpayer compliance; and
- whether efforts were made to avoid detection through the use of offshore vehicles or other means.
Those whose applications are accepted under the Limited Program will be required to pay outstanding tax balances owed, plus interest, and will be subject to penalties. They will not, however, be subject to criminal prosecution and will be exempted from the more stringent penalties which usually apply in cases of gross negligence on the part of the taxpayer.
Taxpayers whose conduct does not consign them to the Limited Program will instead be considered under the General Program. Under that Program, no penalties will be charged and no criminal prosecutions will take place. As well, the CRA will provide partial interest relief, specifically for the years preceding the three most recent years of non-compliance. For example, a taxpayer who makes an application to the VDP and who has failed to file returns for the 2017 through 2022 taxation years may be provided with interest relief with respect to tax arrears owed for the 2017, 2018, and 2019 taxation years. Such relief is generally equal to 50% of interest normally owed – in other words, the taxpayer will be required to pay only half of the interest charges which would otherwise be levied for those years. No interest relief will, however, be provided on tax amounts owed for the three most recent (2020, 2021, and 2022) taxation years. Since interest charges levied by the CRA are, by law, higher than current commercial rates (for instance, the rate levied for July, August, and September of 2024 is 9%) and interest charged is compounded daily, having interest amounts forgiven, even in part, can make a significant difference to the overall tax bill faced by the taxpayer.
In order to benefit from the VDP, taxpayers must first make an application to the Program. That application must include payment of the estimated taxes owing, as a condition of participation in the VDP. Where a taxpayer is financially unable to make that tax payment, he or she can request that the CRA consider a payment arrangement.
The decision to apply to the VDP and to “come clean” about all previous tax transgressions is something that most taxpayers will likely consider with considerable trepidation. Those who are unsure about whether they want to move forward with a VDP application have the option of using the CRA’s “pre-disclosure discussion service”. As the name implies, that service allows taxpayers to participate in preliminary discussions with a CRA official, on an anonymous basis, to gain some knowledge about the VDP program, the process involved, and the potential relief available.
Taxpayers who decide to move forward with an application to the VDP can complete and file Form RC199 Voluntary Disclosures Program Application, which is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc199.html. Once the application is received, the CRA will check to make certain that the applicant meets all the criteria required for a valid application, and that all of the required information, documentation, and payment have been sent. The next step is for the CRA to determine the program (Limited or General) to which the application should be assigned, and the taxation year(s) for which relief is being considered. At each step the taxpayer will be provided with written notice of the CRA’s decisions.
If the decision made is that the application is not eligible for the VDP, the taxpayer will also be advised in writing, with reasons, of the CRA’s decision to deny the application.
Where the decision made by the Agency is one with which the taxpayer does not agree, they are entitled to ask for a second review of the application. It is also possible for a taxpayer to ask the Federal Court to review the decision and to direct the CRA to re-consider the VDP application. However, a taxpayer who wishes to pursue their application to the extent of filing such a Federal Court application is well advised to obtain legal advice before doing so.
Finally, taxpayers should recognize that the VDP Program can’t be used as a kind of “get out of jail free card” with respect to repeated failures to meet tax filing and payment obligations. The CRA’s expectations are that taxpayers who have benefitted from the VDP will thereafter meet their tax obligations, and a second review will be provided for the same taxpayer only in situations where the second application relates to a different matter than the first, and where the circumstances giving rise to the second application were beyond the taxpayer’s control.
Detailed information on the VDP can be found on the CRA website at https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/voluntary-disclosures-program-overview.html. Additional details with respect to the Program are also outlined in the CRA’s Information Circular IC00-1R6 – Voluntary Disclosures Program, which is available on the same website at IC00-1R6 - Voluntary Disclosures Program - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
As the school year draws to a close, the thoughts of millions of Canadian parents turn to the question of how to find – and pay for – child care throughout the summer months. While many Canadians are still able to work from home for some portion of the work week, few (if any) have the kind of work arrangement which allows them to dispense entirely with child care arrangements during the summer months.
As the school year draws to a close, the thoughts of millions of Canadian parents turn to the question of how to find – and pay for – child care throughout the summer months. While many Canadians are still able to work from home for some portion of the work week, few (if any) have the kind of work arrangement which allows them to dispense entirely with child care arrangements during the summer months.
Parents needing to arrange such care don’t lack for options. There is an almost limitless number of choices, but what each of those choices has in common is a price tag – sometimes a steep one. Some options, like playground supervisors or day camps provided by the local recreation authority or municipality, can be relatively inexpensive, while the cost of others, like residential camps that provide room, board, and a range of sports and arts activities can run to thousands of dollars per week.
The good news for families which incur such expenditures is that in many cases a deduction for part or all of the costs incurred can be claimed on the tax return for the year. And, since eligible expenditures can be deducted from income on a dollar-for-dollar basis, that means that income used to pay eligible child care expenses is income which is not taxed. That tax savings is obtained by claiming the Child Care Expense Deduction, which is not specific to summer child care or summer camp costs, but is available for qualifying child care expenses incurred at any time during the year. As well, the rule determining whether child care costs incurred are deductible is fairly straightforward – parents who incur eligible child care costs in order to work (whether in employment or self-employment), or in some cases to attend school, can deduct those costs from income, within specified limits.
The amount of any available child care deduction is calculated on Form T778, and that calculation can seem forbiddingly complex. However, at the end of the day, the amount of child care expenses which can be deducted is simply the least of three figures, and only one of those figures requires a calculation. The steps involved in determining the amount of available child care expense deduction are as follows.
First, the amount of any deduction for child care expenses is limited to two-thirds of the taxpayer’s net income for the year. The income figure used to calculate the two-thirds figure is, generally, the amount shown on Line 23600 of the annual tax return. Where the family incurring child care expenses is a two-income family, it is the spouse with the lower net income who must make the claim and consequently it is their net income which is used to provide that two-thirds of income figure.
The second figure to be determined is the amount actually paid for eligible child care costs during the year. While virtually any licenced child care arrangement will qualify for purposes of the deduction, some more informal arrangements may not. Specifically, no deduction is available for amounts paid to most family members to provide child care. Consequently, it’s not possible for a working spouse to pay the stay-at-home parent to provide child care, nor is it possible to pay an older sibling who is under the age of 18 to provide such services, and to claim a deduction for those expenses incurred. As well, where a claim is made for a deduction for child care expenses on the annual return, the claimant must obtain (and be prepared to provide to the tax authorities) the social insurance number of the individual providing the care as well as a receipt showing the amounts paid, whether to an individual or an organization.
The third figure to be determined is the one which requires some calculation. Basically, the rules governing the deduction of child care expense impose a maximum deduction per child per year (referred to as the “basic limit”), with that basic limit dependent on the age and health of the particular child. As well, where expenses are incurred for overnight camps or boarding schools, the amount deductible for such costs is similarly capped.
For 2024, the following overall limits apply:
- $5,000 in costs per year for a child who was born in 2008 to 2017;
- $8,000 in costs per year for a child who was born after 2017;
- $11,000 in costs per year for a child who was born in 2024 or earlier, but for whom the disability amount can be claimed.
Similar restrictions are placed on the amount of costs which can be deducted for overnight camp or boarding school fees, and those are as follows:
- $125 per week for a child who was born in 2008 to 2017;
- $200 per week for a child who was born after 2017; and
- $275 per week for a child who was born in 2024 or earlier, but for whom the disability amount can be claimed.
Taking all of these figures into account, the computation of a deduction for summer day camp expenses for a typical Canadian family would look like this.
A two-income family has two children and both parents are employed. One spouse earns $70,000 per year, while the other earns $55,000. In 2023, one child is age 9 and the other is age 5. Neither child is disabled. During July and August, both of the children attend a local full-day summer camp, for which the cost is $400 per week per child.
- The first step is to determine the two-thirds of income figure. Since it is the lower-income spouse who must make the deduction claim, that figure is two-thirds of $55,000, or $36,663. Consequently, any deduction for child care expenses for the year cannot exceed $36,663.
- The second calculation is the total amount of child care expenses paid for each child:
$400 per week for eight weeks of summer camp, or $3,200.
Total child care expenses for each child are therefore $3,200. - The last step is to determine the basic limit for child care expenses for each child, as follows:
- the basic limit for the 5-year-old (who was born after 2017) is $8,000, and so the entire $3,200 in summer day camp costs incurred can be deducted.
- the basic limit for the 9-year-old (who was born between 2008 and 2017) is $5,000, and so once again the entire $3,200 incurred for summer day camp costs can be deducted.
As well, since the camp is a day camp, the dollar amount cost limitations which apply with respect to overnight camps do not apply to limit the amount of expenses claimed by the family.
The total deduction available for child care expenses incurred for the 2024 tax year will therefore be $6,400. That deduction is claimed on Line 21400 of the tax return filed by the lower-income spouse for the year, reducing their taxable income from $55,000 to $48,600, and resulting in a federal tax savings of about $960. A similar tax deduction is claimed as well for provincial tax purposes; the amount of provincial tax saved will depend on the tax rates imposed by the province in which the family lives.
When parents are choosing summer activities/care for their children, that decision involves a number of factors, including the child’s interests and abilities, the availability of programs which match those interests and abilities, the work schedules of one or both parents, and, of course, the cost of the program or activity. While the availability of a “subsidy” through the tax system should never be the sole determinant of what activity or camp is the best choice, there’s no denying that being able to claim a deduction for the costs involved can tip the balance toward one or choice or another, or can bring a formerly unavailable option within a family’s financial reach.
Parents wishing to find out more about the child care expense deduction, and perhaps to calculate the maximum deduction which will be available to them for the 2024 tax year, should consult Form T778 E (23). The form which is currently on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t778.html is from the 2023 tax year, and consequently the age limits must be adjusted by one year for child care expense claims for 2024. (The actual form for 2024 will be posted on the CRA website early in 2025). The currently available form does, however, provide a detailed explanation of the rules governing the child care expense deduction, and those rules (as well as the applicable dollar limits, which are not indexed to inflation) will continue to apply for the 2024 tax year.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Each spring and summer, tens of thousands of Canadian families sell their homes and move – sometimes to a bigger and better property in the same town or city, and sometimes to a new city or even another province. At the same time, university students make the annual move from their university residences or apartments back to the family home for the summer. And, whatever the reason for the move or the distance to the new location, all moves have two things in common – stress and cost. Even where the move is a desired one, moving inevitably means upheaval of one’s life and the costs involved can be very significant. There is not much that can diminish the stress of moving, but the associated costs can be offset somewhat by a tax deduction which may be claimed for many of those costs.
Each spring and summer, tens of thousands of Canadian families sell their homes and move – sometimes to a bigger and better property in the same town or city, and sometimes to a new city or even another province. At the same time, university students make the annual move from their university residences or apartments back to the family home for the summer. And, whatever the reason for the move or the distance to the new location, all moves have two things in common – stress and cost. Even where the move is a desired one, moving inevitably means upheaval of one’s life and the costs involved can be very significant. There is not much that can diminish the stress of moving, but the associated costs can be offset somewhat by a tax deduction which may be claimed for many of those costs.
While it’s common to the refer to the “moving expense deduction” as though it were available to all taxpayers in all circumstances, the fact is that there is actually no universally available deduction claimable for moving costs – in order to be tax deductible, such moving costs must meet specific criteria. Our tax system allows taxpayers to claim a deduction only where the move is made to get the taxpayer closer to their new place of work, whether that work is a transfer within the same company, a change in employers, or moving to run a business at a new location. Specifically, moving expenses can be deducted where the move is made to bring the taxpayer at least 40 kilometres closer to their new place of work. That requirement is satisfied where, for instance, a taxpayer moves from Toronto to Calgary to take that new job. It’s also met where a taxpayer is transferred by their employer to another job in a different location and the taxpayer’s move will bring them at least 40 kilometres closer to the new work location. It’s not met where an individual or family move up the property ladder by selling and purchasing a new home in the same town or city.
As well, it’s not actually necessary to be a homeowner in order to claim moving expenses. The list of moving related expenses which may be deducted is basically the same for everyone – homeowner or tenant – who meets the 40 kilometre requirement. Students who move to take a summer job (even if that move is back to the family home) can also make a claim for moving expenses incurred where the overriding 40-kilometre requirement is met.
It's important to remember, however, that even where the 40-kilometre requirement is met, moving costs can be deducted only from income earned from employment or self-employment (business) – such costs cannot be deducted from other types of income, like investment income or employment insurance benefits.
The general rule is that a taxpayer can claim reasonable amounts that were paid for moving themself, family members, and household effects. In all cases, the moving expenses can only be deducted from employment or self-employment income earned at the new location. Where the move takes place later in the year, and moving costs are significant, it’s possible that the amount of income earned at the new location in the year of the move will be less than deductible moving expenses incurred. In such instances, those expenses can be carried over and deducted from income earned at the new location in any future year.
Within the general rule, there are a number of specific inclusions, exclusions, and limitations. The following is a list of expenses which can be claimed by the taxpayer without specific dollar figure restrictions (but subject, as always, to the overriding requirement of “reasonableness”).
- Travel expenses, including vehicle expenses, meals, and accommodation, to move the taxpayer and members of their household to their new residence (note that not all members of the household have to travel together or at the same time);
- Transportation and storage costs (such as packing, hauling, movers, in-transit storage, and insurance) for household effects, including such items as boats and trailers;
- Costs for up to 15 days for meals and temporary accommodation near the old and the new residences for the taxpayer and members of their household;
- Lease cancellation charges (but not rent) on the old residence;
- Legal or notary fees incurred for the purchase of the new residence, together with any taxes paid for the transfer or registration of title to the new residence (excluding GST or HST);
- The cost of selling the old residence, including advertising, notary or legal fees, real estate commissions, and any mortgage penalties paid when a mortgage is paid off before maturity; and
- The cost of changing an address on legal documents, replacing driving licences and non-commercial vehicle permits (not including insurance), and costs related to utility hook-ups and disconnections.
At some times and in some places, houses sell almost as soon as they are put on the market, while at other times or in other places it can take weeks or even months to find a buyer. When the latter is the case, the homeowner might have to move to start that new job before the “old” house has sold. In those circumstances, the taxpayer is entitled to deduct up to $5,000 in costs incurred for the maintenance of the old residence while it is vacant and on the market. Specifically, costs including interest, property taxes, insurance premiums, and heat and utilities expenses paid to maintain the old residence while it is vacant and efforts are being made to sell it may be deducted. If any family members are still living at the old residence, or it is being rented, no such deduction is available.
It may seem from the forgoing that virtually all moving-related costs will be deductible – however, there are some costs for which the Canada Revenue Agency (CRA) will not permit a deduction to be claimed, as follows:
- Expenses for work done to make the old residence more saleable;
- Any loss incurred on the sale of the old residence;
- Expenses for job-hunting or house-hunting trips to another city (for example, costs to travel to job interviews or meet with real estate agents);
- Expenses incurred to clean or repair a rental residence to meet the landlord’s standards;
- Costs to replace such personal-use items as drapery and carpets;
- Mail forwarding costs; and
- Mortgage default insurance.
To claim a deduction for any eligible costs incurred, supporting receipts must be obtained. While the receipts do not have to be filed with the return on which the related deduction is claimed, they must be kept in case the CRA wants to review them.
Anyone who has ever moved knows that there are a seemingly endless number of details to be dealt with. For some types of costs, the administrative burden of keeping track of (and retaining receipts for) such moving-related expenses can be minimized by choosing instead to claim a standardized amount. Specifically, the CRA allows taxpayers to claim a fixed amount, without the need for detailed receipts, for travel and meal expenses related to a move. Using that standardized, or flat-rate method, taxpayers may claim up to $23 per meal, to a maximum of $69 per day, for each person in the household. Similarly, the taxpayer can claim a set per-kilometre amount for kilometres driven in connection with the move; that per kilometre amount ranges from 53.0 cents for Alberta to 70.5 cents for the Yukon. In all cases, it is the province or territory in which the travel begins which determines the applicable rate.
These standardized travel and meal expense rates are those which were in effect for the 2023 taxation year – the CRA will be posting the rates for 2024 on its website early in 2025, in time for the tax filing season.
Once eligibility for the moving expense deduction is established, the rules which govern the calculation of the available deduction are not complex, but they are very detailed. The best summary of those rules is found on the form used to claim such expenses – the T1-M. The current version of that form can be found on the CRA’s website at T1-M Moving Expenses Deduction - Canada.ca, and more information (including a link to rates for standardized meal and travel cost claims) is available at Line 21900 – Moving expenses - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Many (if not most) taxpayers think of tax planning as a year-end exercise, one to be carried out in the last few weeks of the year, in order to take the steps needed to minimize the tax bill for that year. And it’s true that almost all strategies needed to both minimize the tax hit for the current year and to ensure that there won’t be a big tax bill come next April must be put in place by December 31 (the making of registered retirement savings plan (RRSP) contributions being the notable exception). Nonetheless, there’s a lot to recommend carrying out a mid-year review of one’s tax situation for the current year. Doing that review mid-year, instead of waiting until December, gives the taxpayer the chance to make sure that everything is on track and, especially, to put into place any adjustments needed to help ensure that there are no unpleasant tax surprises when the return for 2024 is filed next spring. And, while the deadline for implementing most tax saving strategies may be December 31, it’s also the case that opportunities to make a significant difference to one’s current-year tax situation diminish as the calendar year progresses.
Many (if not most) taxpayers think of tax planning as a year-end exercise, one to be carried out in the last few weeks of the year, in order to take the steps needed to minimize the tax bill for that year. And it’s true that almost all strategies needed to both minimize the tax hit for the current year and to ensure that there won’t be a big tax bill come next April must be put in place by December 31 (the making of registered retirement savings plan (RRSP) contributions being the notable exception). Nonetheless, there’s a lot to recommend carrying out a mid-year review of one’s tax situation for the current year. Doing that review mid-year, instead of waiting until December, gives the taxpayer the chance to make sure that everything is on track and, especially, to put into place any adjustments needed to help ensure that there are no unpleasant tax surprises when the return for 2024 is filed next spring. And, while the deadline for implementing most tax saving strategies may be December 31, it’s also the case that opportunities to make a significant difference to one’s current-year tax situation diminish as the calendar year progresses.
Mid-year is also a good time to check up on current year taxes because nearly all of the information needed to do so is readily available to the taxpayer. By the beginning of June, most Canadians have filed their individual income tax return for the 2023 tax year and received a Notice of Assessment outlining their tax position for that year. Those who receive a refund will celebrate that fact or, less happily, those who receive a tax bill will pay up the amount owed. And, although the taxpayer’s reaction to one or the other of these outcomes will be very different, the fact is that a large tax bill owing or a large tax refund arise from the same cause – and that is that the amount of tax paid throughout the year was incorrect. While most taxpayers are delighted to receive a tax refund (often viewing it, incorrectly, as “free” money from the government), the fact is that a large refund means that the taxpayer has overpaid their taxes for the previous year and has essentially provided the Canada Revenue Agency with an interest-free loan of funds that could have been put to better use in the taxpayer’s hands. The other outcome – a large bill – means that taxes have been underpaid for the previous year and that could mean paying interest charges to the CRA. Either way, it’s in the taxpayer’s best interests to ensure that tax paid throughout the year is sufficient to cover their taxes, without overpaying or underpaying. The best-case scenario, from a tax and personal finance perspective, is to file a tax return and receive a Notice of Assessment which indicates that there is neither a substantial refund payable nor any significant amount owing.
For most Canadians, income and available deductions and credits don’t vary significantly from one year to the next. Where that’s the case, the amount of tax owed by the taxpayer for 2023 (a figure that can be found on Line 43500 of the Notice of Assessment) is likely to be very close to one’s tax liability for 2024.
After finding out how much tax was paid for 2023, the next step in doing a review is to get a sense of how much income tax has already been paid for the 2024 tax year. There are two ways of paying income taxes throughout the year. The majority of Canadians (including all employees) have income taxes deducted from their paycheques and remitted to the federal government on their behalf – a process known as source deductions. Taxpayers who do not have income tax deducted at source – which would include self-employed individuals and, frequently, retired taxpayers – make tax payments directly to the federal government (four times a year, in March, June, September, and December) through the tax instalment system.
Using the tax payable figure for 2023 as a guide, it’s necessary to figure out whether income tax payments made to date, either through deductions made from the taxpayer’s paycheque, or through instalment payments of tax, match up with that tax liability figure, recognizing that by this point in the year, approximately one-half of taxes for 2024 should already have been paid. If they haven’t, and particularly if there is a significant shortfall which would mean a large balance owing when the tax return for 2024 is filed next spring, the taxpayer will need to take steps to remedy that.
Where the individual involved pays tax by instalments, the solution is simple. They can simply increase or decrease the amount of remaining instalment payments made in 2024 so that the total instalment payments made over the course of this year accurately reflect the total tax payable for the year. The only caveat in that situation is that the individual should err on the side of caution to ensure that there isn’t a shortfall in instalment payments, which could result in interest charges being levied by the CRA.
The situation is a little more complex for employees, or anyone who has tax deducted at source. Often when such individuals discover that they are overpaying taxes through source deductions, it’s because deductions which they claim on their return for the year – for expenditures like deductible support payments, child care expenses, or contributions to a registered retirement savings plan (RRSP) or first home savings account (FHSA) – aren’t taken into account in calculating the amount of tax to deduct at source. The solution for employees who find themselves in that situation is to file a FormT1213 – Request to Reduce Tax Deductions at Source with the CRA. That form is available on the CRA website at T1213 Request to Reduce Tax Deductions at Source - Canada.ca. On the T1213, the taxpayer identifies the amounts which will be deducted on the return for the year and, once the CRA verifies that those deductible expenditures (like child care expense costs or RRSP contributions) are being made, it will authorize the taxpayer’s employer to reduce the amount of tax which is being withheld at source to take account of that deduction.
Where it’s the opposite situation and a taxpayer finds that source deductions being made will not be sufficient to cover their tax liability for the year (meaning a tax bill to be paid next spring), the solution is to have those source deductions increased. No one likes paying more taxes, but where taxes are owed, the only choice involved is to pay them now or pay them later. Spreading out that payment over the rest of the tax year is much less painful than being hit with a large tax bill (as well as interest charges when that tax bill can’t be paid in full and on time) when the return for the year is filed next spring.
Take, for example, an employee who found out, after filing the return for 2023, that an additional $2,000 in taxes was owed. Assuming that their income and the amount of tax deducted from their paycheque doesn’t change, it’s likely that a similar amount will be owed when the return for 2024 is filed. If that taxpayer is paid biweekly, there will be about 13 paycheques between the end of June and the end of the year. Increasing the amount of tax deducted from those paycheques by about $75 per paycheque will mean that the $2,000 in taxes owing is paid to the Canada Revenue Agency by the end of the year – thereby avoiding a large tax bill when the return for 2024 is filed in the spring of 2025.
To increase the amount of tax deducted from their paycheque, the employee needs to obtain a TD1A form for their province of residence for 2024. That form can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later.html. On the reverse side of that Form TD1, there is a section entitled “Additional tax to be deducted”, in which the employee can direct their employer to deduct additional amounts at source for income tax, and can specify the dollar amount which is to be deducted from each paycheque on a go-forward basis.
No one particularly likes thinking about taxes, at any time of year, but ignoring the issue definitely won’t make it go away. The investment of a few hours of time now, and putting in place any needed adjustments, can mean avoiding a nasty surprise in the form of a large tax bill which must be paid when the return for 2024 is completed and filed next spring.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most retired Canadians receive income from two government-sponsored retirement income programs – the Canada Pension Plan (CPP) and the Old Age Security (OAS) program. While benefits from both are paid to recipients by the federal government on a monthly basis, there are significant differences in how the two plans are funded, the amounts which can be received, and, most significantly for retirees, in how entitlement to benefits is determined each year.
Most retired Canadians receive income from two government-sponsored retirement income programs – the Canada Pension Plan (CPP) and the Old Age Security (OAS) program. While benefits from both are paid to recipients by the federal government on a monthly basis, there are significant differences in how the two plans are funded, the amounts which can be received, and, most significantly for retirees, in how entitlement to benefits is determined each year.
Canadians who participated in the paid work force during their adult life will have contributed to the Canada Pension Plan (contributions are mandatory, and are deducted from the individual’s paycheque and remitted to the federal government on their behalf) and will be able to receive CPP retirement benefits as early as age 60. The amount of monthly benefit received depends on the amount of contributions made by the benefit recipient made during their working life.
The Old Age Security program differs from the Canada Pension Plan in a number of ways. The OAS program is funded entirely from general government revenues, with no direct contribution made by individual Canadians. Entitlement to OAS is based solely on the number of years of Canadian residence, and individuals who were resident in Canada for 40 years after the age of 18 can receive full OAS benefits. As of the second quarter (April to June of 2024), the full OAS benefit for individuals under the age of 75 is $713.34 per month.
The OAS program is distinct from other sources of retirement income in another, less welcome, way, in that it is the only government retirement income program under which the federal government can require the recipient of benefits to repay those benefits, in whole or in part. That repayment requirement comes about through the OAS “Recovery Tax”, which is universally known as the OAS “clawback”.
While the rules governing the administration of the clawback can be confusing, the concept is a (relatively) simple one. Anyone who received OAS benefits during 2023 and had income for that year of more than $86,912 must repay a portion of OAS benefits received. That repayment, or clawback, is administered by reducing the amount of OAS benefits which the individual receives during the following benefit year, which runs from July 1, 2024 to June 30, 2025.
For example, an individual who receives full OAS during 2023 and has net income for the year of $96,000 will be subject to the clawback. They must repay OAS amounts received at a rate of 15 cents (or 15%) of every dollar of income over the clawback income threshold, as in the following simplified example.
The OAS clawback threshold for 2023 is $86,912.
If your income in 2023 was $96,000, then your repayment would be 15% of the difference between $96,000 and $86,912:
$96,000 - $86,912 = $9,088
$9,088 x 0.15 = $1,363.20
You would have to repay $1,363.20 ($113.60 per month) for the July 2024 – June 2025 period.
The OAS clawback affects only individuals who have an annual income of at least $86,912 (for 2023), and it’s arguable that at such income levels, the clawback requirement does not impose any real financial hardship. Nonetheless, the OAS clawback is a perpetual irritant to those affected by it, perhaps because of the sense that they are being penalized for being disciplined savers, or good managers of their finances during their working years, in order to ensure a financially comfortable retirement.
While any sense of grievance can’t alter the reality of the OAS clawback, there are strategies which can be put in place to either minimize or, in some cases, entirely eliminate one’s exposure to that clawback. Some of those planning considerations are better addressed earlier in life, prior to retirement, However, it’s not too late, once one is already receiving OAS, to make arrangements to avoid or minimize the clawback.
In all cases, no matter what strategy is employed, the goal, as with much of individual tax planning, is to “smooth” one’s income from year to year, so that net income for each year comes in under the OAS clawback threshold and, not incidentally, minimizes exposure to the higher federal and provincial income tax rates which apply once taxable income exceeds $100,000.
The starting point, for taxpayers who are approaching retirement, is to determine how much income will be received from all sources during retirement, based on CPP and OAS entitlement, any savings accrued through an RRSP, and any amounts which may be received from a private pension plan.
Anyone who has an RRSP must begin receiving income from those RRSP funds in the year after that person turns 71. However, it’s possible to begin receiving income from an RRSP at any time. Similarly, an individual who is eligible for CPP retirement benefits can begin receiving those benefits anytime between age 60 and age 70, with the amount of monthly benefit receivable increasing with each month receipt is deferred. The same calculation applies to OAS benefits, which can be received as early as age 65 or deferred up until age 70.
Once the amount of annual income is determined, strategies to smooth out that income can be put in place. Those strategies can include receiving income from an RRSP prior to age 71, so as to reduce the total amount within the RRSP and so thereby reduce the likelihood of having a large “bump” in income when required withdrawals kick in at that time.
Taxpayers are sometimes understandably reluctant to take steps which they view as depleting their RRSP savings, but receiving income from an RRSP doesn’t necessarily mean spending that income. While tax has to be paid on any withdrawals (no matter what the taxpayer’s age), the after-tax amounts that aren’t currently needed as income can be contributed to the taxpayer’s tax-free savings account (TFSA), where they can be invested in the same manner as they were in the RRSP and can continue to compound free of current tax. And, when the taxpayer has need of those funds in retirement, they can be withdrawn free of tax and they won’t count as income for purposes of the OAS clawback – or for purposes of any other income-tested tax credit or benefit.
Taxpayers who are married can also “even out” their income by using pension income splitting, so that neither of them has sufficient income to be affected by the clawback. Using pension income splitting, the spouse who has income over the OAS clawback threshold re-allocates the “excess” income to their spouse on the annual return, and that income is then considered to be income of the recipient spouse, for purposes of both income tax and the OAS clawback. To be eligible for pension income splitting, the income to be reallocated must be private pension income, which is generally income from an RRSP or registered retirement income fund (RRIF), or from an employer-sponsored pension plan.
There are two reasons why pension income splitting is a particularly attractive strategy for avoiding or minimizing the OAS clawback. First, there is no need to actually change the source or amount of income received by each spouse, as the reallocation of income is “notional”, existing only on the return for the year. Second, no decision has to be made on pension income splitting until it’s time to file the return for the previous year, meaning that spouses can easily calculate exactly how much income has to be reallocated in order to avoid the clawback, and to reduce tax liability generally. More information on the kinds of income eligible for pension income splitting, and the mechanics of the process, can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/pension-income-splitting.html.
Detailed information on the OAS clawback is available at https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/repayment.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
This year, the Canada Revenue Agency (CRA) will receive and process more than 30 million individual income tax returns for the 2023 tax year. No two of those returns will be identical, as each such return will have its own particular combination of amounts and sources of income reported, and deductions and credits claimed. There is, however, one thing which every one of those returns has in common: for each and every one, the CRA will review the return filed, determine whether it is in agreement with the information contained therein, and, finally, issue a Notice of Assessment (NOA) to the taxpayer summarizing the Agency’s conclusions with respect to the taxpayer’s tax situation for the 2023 tax year.
This year, the Canada Revenue Agency (CRA) will receive and process more than 30 million individual income tax returns for the 2023 tax year. No two of those returns will be identical, as each such return will have its own particular combination of amounts and sources of income reported, and deductions and credits claimed. There is, however, one thing which every one of those returns has in common: for each and every one, the CRA will review the return filed, determine whether it is in agreement with the information contained therein, and, finally, issue a Notice of Assessment (NOA) to the taxpayer summarizing the Agency’s conclusions with respect to the taxpayer’s tax situation for the 2023 tax year.
When all goes as it should, the information – and the tax result – outlined in the Notice of Assessment is the same as that provided by the taxpayer in their return. In a minority of cases, however, the information presented in the Notice of Assessment will differ from that provided by the taxpayer in the 2023 tax return. Where that difference means an unanticipated refund, or a refund larger than the one expected, it’s a good day for the taxpayer. In some cases, however, the Notice of Assessment will inform the taxpayer that additional amounts are owed to the CRA. When that happens, the taxpayer has to figure out why, and to decide whether or not to dispute the CRA’s conclusions.
Many such discrepancies are the result of an error made by the taxpayer in completing the return. A lot of information from a variety of sources is reported on even the most straightforward of returns and it’s easy to overlook some of that information. Especially where the taxpayer has multiple sources of income – for instance, where individuals are working in the gig economy they may work under a succession of contracts during the year, or have multiple sources of income at any given time – it can be easy to overlook one or more small amounts of income. Equally, newly retired individuals who are used to having only one source of income – their paycheques – may now be receiving Canada Pension Plan benefits, Old Age Security amounts, private pension income, and, possibly, withdrawals from a registered retirement savings plan or registered retirement income fund, making it difficult to keep track of everything.
As well, most Canadian taxpayers now use tax return preparation software to complete and file their returns. While using such software essentially eliminates the risk of arithmetical error, inputting errors can still occur.
Where there is additional tax owing because of an error or omission made by the taxpayer in completing the return, and the CRA’s figures are correct, disputing the assessment doesn’t really make sense. There is as well a persistent tax myth which says that if a taxpayer doesn’t receive an information slip (T4 or T5, as the case might be) for income received during the year, that income doesn’t have to be reported and therefore isn’t taxable. That is not the case, and never has been. All taxpayers are responsible for reporting all income received and paying tax on that income, and the fact that an information slip was lost, mislaid, or never received doesn’t change anything. The CRA receives a copy of all information slips issued to Canadian taxpayers, and its systems will cross-check to ensure that all income stated on those information slips is accurately reported in the tax return.
There are, however, instances in which the CRA and the taxpayer are in disagreement over substantive issues, and those issues most often involve claims for deductions or credits. For instance, the CRA may have disallowed an individual’s claim for a medical expense, or for a deduction claimed for a business expenditure, and the taxpayer believes in good faith that the credit or deduction claim is a legitimate one.
Whatever the nature of the dispute, the first step is always to contact the CRA for an explanation of the reasons why the change was made. While the information provided in the NOA is a good summary of the taxpayer’s tax situation for the year, it may not always be clear on precisely how and why the taxpayer and the Agency disagree on the actual amount of income tax which the taxpayer must pay for the year. The first step to be taken would be a call to the Individual Income Tax Enquiries line at 1-800-959-8281, where client services agents who have access to the taxpayer’s return can explain any changes which were made during the assessment process. A real-time notification of the hours of service and current telephone wait times for that service is available on the CRA website at Contact the Canada Revenue Agency - Canada.ca. If that call doesn’t resolve the taxpayer’s questions, or there is still a disagreement, the taxpayer has to decide whether to take the next step of filing a Notice of Objection to the Notice of Assessment.
Filing a Notice of Objection formally advises the CRA that the taxpayer is disputing the Agency’s determination of their tax liability for the taxation year in question. Not incidentally, the filing of an Objection also brings to a halt most efforts undertaken by the CRA to collect taxes which it considers owing for the taxation year under dispute (although, if the taxpayer is eventually found to owe an amount in dispute, interest on that amount will have accumulated in the interim). Where the taxpayer files an Objection, the CRA’s collection efforts are, in most cases, suspended until 90 days after the date the CRA’s decision on that Objection is sent to the taxpayer.
There is a time limit by which any Objection must be filed, albeit a reasonably generous one. Individual taxpayers must file an Objection by the later of 90 days from the mailing date of the Notice of Assessment (the date found at the top of page 1) or one year from the due date of the return which is being disputed. So, for tax returns for the 2023 tax year, the one-year deadline (which is usually, but not always, the later of those two dates) would be April 30, 2025 (or June 17, 2025 for self-employed taxpayers and their spouses). As with most things related to taxes, it’s best not to put it off. At the very least, if the taxpayer is ultimately found to owe some or all of the taxes assessed by the CRA, interest will have accrued on those taxes for the entire period since the filing due date and, if the filing of the Objection is delayed, the CRA may well have already commenced its collection efforts.
Taxpayers who have registered with the CRA’s online services feature My Account can file their Notice of Objection online at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html. The taxpayer provides information with respect to the assessment being disputed and the reasons why the assessment is being disputed and submits those reasons by clicking on the Submit button at the bottom of the "File a formal dispute” page. Taxpayers who are disputing their tax assessment online can also scan and send supporting documents relating to that dispute to the Agency.
While filing a dispute through My Account is certainly faster than mailing (or faxing) a hard copy of the Notice of Objection, not all taxpayers want to use that option. Taxpayers who choose instead to file their objection using a hard copy of a Notice of Objection form can find the most current version of the CRA’s standardized T400A Objection (which was updated and re-issued in the fall of 2023) on the Agency’s website at T400A Notice of Objection - Income Tax Act - Canada.ca.
Taxpayers aren’t obligated to use the CRA’s official Notice of Objection form – any communication which makes it clear that the taxpayer is objecting to his or her Notice of Assessment will do. Nonetheless, there’s no reason not to use the standardized form, and there are benefits to doing so. Using the T400A form will make it clear to the CRA that a formal objection is being filed, will present the necessary information in a format with which the Agency is familiar, and will also mean that no required information is inadvertently omitted. It’s also helpful to include a copy of the Notice of Assessment which is being disputed. Taxpayers should also consider ensuring proof of both delivery and time of delivery by sending the form or letter to the Appeals Intake Center in a way which provides for tracking and proof of delivery.
There is a single Appeals Intake Centre, and the mailing address for that Centre can be found on the CRA’s Notice of Objection form. A Notice of Objection can also be faxed to the Appeals Intake Centre, and the fax numbers for that Centre are available on the CRA website at File an objection – Income tax – Canada.ca. Finally, taxpayers can contact the CRA at its objection enquires phone line in order to get information about the status of their appeal. The toll-free telephone number for calls from within Canada to that line is 1-800-959-5513.
In the course of making its decision, the Agency may or may not contact the taxpayer for further discussion of the issues in dispute. Should the taxpayer be contacted, they may be asked to provide representations outlining their position, in writing or at a meeting. Through such representations and meetings, it may be possible for the taxpayer and the CRA to come to an agreement on the taxpayer’s tax liability. In either case, the CRA will either confirm its original assessment or change it. If the original assessment is changed, the CRA will issue a Notice of Reassessment outlining the changes. If the taxpayer continues to disagree with the CRA’s position, the next step is an appeal to the Tax Court of Canada. It’s generally a good idea, if an appeal is being considered, to consult legal counsel before filing that appeal.
Detailed information on the objection process is available on the CRA website at File an objection – Income tax – Canada.ca The Agency also publishes a useful pamphlet entitled Resolving Your Dispute: Objection and Appeal Rights under the Income Tax Act, and the most recent release of that publication can be found on the CRA website at P148 Resolving your dispute: Objection rights under the Income Tax Act - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
For the majority of Canadians, the due date for filing of an individual tax return for the 2023 tax year was Tuesday April 30, 2024. (Self-employed Canadians and their spouses have until Monday June 17, 2024 to get that return filed.) When things go entirely as planned and hoped, the taxpayer will have prepared a return that is complete and correct, and filed it on time, and the Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and the amount of tax payable determined by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can be derailed in any number of ways.
For the majority of Canadians, the due date for filing of an individual tax return for the 2023 tax year was Tuesday April 30, 2024. (Self-employed Canadians and their spouses have until Monday June 17, 2024 to get that return filed.) When things go entirely as planned and hoped, the taxpayer will have prepared a return that is complete and correct, and filed it on time, and the Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and the amount of tax payable determined by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can be derailed in any number of ways.
By April 22, 2024, almost 21 million individual income tax returns for the 2023 tax year had been filed with the CRA. And, inevitably, some of those returns contain errors or omissions that must be corrected.
Nearly 95% of the returns which have already been filed for the 2023 tax year were filed through electronic filing methods, meaning that they were prepared using tax return preparation software. The use of such software significantly reduces the chance of making a clerical or arithmetical error, like entering an amount on the wrong line or adding a column of figures incorrectly. However, no matter how good the software, it can work only with the information that is provided to it. Sometimes taxpayers prepare and file a return, only to later receive a tax information slip that should have been included on that return (or, more frequently, locate a tax information slip that had been received but was overlooked). It’s also easy to make an inputting error when transposing figures from an information slip (a T4 from one’s employer, for instance) into the software, such that $76,326 in income becomes $73,626 or $66,326. Whatever the cause, where the figures input are incorrect or information is missing, those errors or omissions will be reflected in the final (incorrect) tax payable figure produced by the software.
When the error or omission is discovered in a return which has already been filed, the question which immediately arises is how to make things right. The first impulse of many taxpayers is to file another return, in which the complete and correct information is provided, but that’s not the right answer. There are, however, several ways in which a mistake or omission on an already filed tax return can be corrected, including online options.
For several years now, taxpayers who file their tax returns online, whether through NETFILE or EFILE, have been able to notify the CRA of an error or omission in an already-filed return electronically by using the Agency’s ReFILE service. That service, which can be found at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/refile-online-t1-adjustments-efile-service-providers.html, allows taxpayers to very easily make corrections to an already filed return online, on the CRA website. Those taxpayers who used NETFILE to file their return can file an adjustment to a return filed for any of the 2020, 2021, 2022 and 2023 tax years.
While the majority of changes which a taxpayer is likely to want to make on his or her return can be made through electronic means, there are limitations to the service. ReFILE cannot be used to make changes to personal information, like the taxpayer’s address or direct deposit details. There are also some types of tax matters which cannot be handled through ReFILE, like applying for a disability tax credit or child and family benefits.
Taxpayers who have registered for the CRA’s “My Account” service have the option of making a change or correction to a return online through My Account, using the “Change My Return” feature. At one time, the process of becoming registered for My Account was somewhat cumbersome, as the taxpayer had to wait to receive a CRA-issued security code, which was sent by regular mail. That process has been streamlined, and registration for My Account can now be done in real time through what the CRA terms “document verification”. That document verification process requires a user to take a smartphone picture of their government-issued photo identification and of themself in order to verify identity. For purposes of this process, the only acceptable photo identification documents are a Canadian passport, Canadian drivers’ licence, or provincial/territorial photo ID card. More information on how to register for My Account using the document verification method can be found on the CRA website at My Account – What’s new - Canada.ca.
While using the CRA’s online services, whether through My Account or ReFILE, is certainly the fastest way to make a change or correction to an already-filed return, taxpayers who don’t wish to use any online method do still have a paper option. The paper form to be used is Form T1-ADJ E (23), which can be found on the CRA website at T1 Adjustment Request (canada.ca). Those who are unable to print the form off the website can order a copy to be sent to them by mail by calling the CRA’s individual income tax enquiries line at 1-800-959-8281.
Hard copy of a T1-ADJ E (23) is filed by sending the completed document to the appropriate Tax Center, meaning the one with which the tax return was originally filed. A listing of Tax Centres and their addresses can be found on the reverse of the TD-ADJ E (23) form. A taxpayer who isn’t sure any more which Tax Centre their return was filed with can go to https://www.canada.ca/en/revenue-agency/corporate/contact-information/tax-services-offices-tax-centres.html on the CRA website and select their location from the drop-down menu found there. The address for the correct Tax Centre will then be provided.
Where a taxpayer discovers an error or omission in a return already filed, the impulse is to correct that mistake as soon as possible. However, no matter which method is used to make the correction – ReFILE, My Account or the filing of a T1-ADJ (23) in hard copy – it’s necessary to wait until the Notice of Assessment for the (incorrect) return already filed is received. Corrections to a return which are submitted prior to the time that return is assessed simply can’t be processed by the Agency.
Once the Notice of Assessment is received, and an adjustment request is made, it will take at least a few weeks before the CRA responds by issuing a Notice of Reassessment based on the new information provided by the taxpayer. Not surprisingly, requests which are submitted during the CRA’s peak return processing period between March and July will likely take longer.
Sometimes the CRA will contact the taxpayer, even before a return is assessed (or reassessed), to request further information, clarification, or documentation of deductions or credits claimed (for example, receipts documenting medical expenses claimed, or child care costs). Whatever the nature of the request, the best course of action is to respond promptly, and to provide the requested documents or information. The CRA can assess only on the basis of the information with which it is provided, and it is the taxpayer’s responsibility to provide support for any deduction or credit claims made. Where a request for information or supporting documentation for a claimed deduction or credit is ignored by the taxpayer, the assessment will proceed on the basis that such support does not exist. Providing the requested information or supporting documentation can usually resolve the question to the CRA’s satisfaction, and its assessment of the taxpayer’s return can then be completed.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
As everyone knows, buying one’s first home – achieving that elusive first step on to the “property ladder” – has always presented a challenge, and that challenge has rarely been greater than it is now. The two unavoidable hurdles which must be cleared by first time home buyers are putting together sufficient funds for a down payment, and qualifying for mortgage financing under mortgage lending requirements which have become increasingly stringent in recent years. Soaring house prices and mortgage interest rates which have steadily increased over the past two years combine to make it difficult to clear either or both of those hurdles.
As everyone knows, buying one’s first home – achieving that elusive first step on to the “property ladder” – has always presented a challenge, and that challenge has rarely been greater than it is now. The two unavoidable hurdles which must be cleared by first time home buyers are putting together sufficient funds for a down payment, and qualifying for mortgage financing under mortgage lending requirements which have become increasingly stringent in recent years. Soaring house prices and mortgage interest rates which have steadily increased over the past two years combine to make it difficult to clear either or both of those hurdles.
Help is provided to first time home buyers through a number of federal and provincial tax credit or tax deferral programs, and three new measures recently announced by the federal government as part of the 2024-25 Federal Budget are intended to provide further assistance with putting together a down payment, qualifying for mortgage financing, and repaying amounts borrowed to purchase a first home.
Changes to the Home Buyers’ Plan
The first two measures relate to changes to the federal Home Buyers’ Plan, or HBP. The HBP allows first-time buyers who have money saved in a registered retirement savings plan (RRSP) to withdraw the funds held in that RRSP (to a prescribed limit) on a tax-free basis, as long as those funds are used toward the purchase of a first home. Under current rules, a first-time home buyer can withdraw up to $35,000 from his or her RRSP to use toward the purchase of a first home.
This year’s Federal Budget included a proposal to increase the amount which each individual can withdraw on a tax-free basis from their RRSP for the purchase of a first home from $35,000 to $60,000. The change is effective for RRSP withdrawals made by HBP participants after the federal budget date of April 16, 2024.
While the HBP rules allow first-time home buyers to withdraw funds on a tax-free basis from their RRSPs, those rules also require that the funds be repaid to the RRSP. That repayment takes place on a prescribed schedule – repayments in a specified amount must start in the second year after the withdrawal was made and must be completed within 15 years. In any year(s) in which a required repayment is not made in full, the amount of any repayment not made is included in the income of the RRSP holder for the year and is fully taxed as income.
The first few years of home ownership are often the most challenging from a financial perspective, as new homeowners adjust to the need to make regular mortgage payments and property tax payments and to meet all of the varied (and often unanticipated) expenses that home ownership entails. Having to also make repayments to one’s RRSP at the same time undoubtedly adds to the financial stress.
In this year’s budget, the federal government proposed a change in the repayment rules for the HBP. As a temporary measure, HBP participants who make a first withdrawal from their RRSP between January 1, 2022 and December 31, 2025 will not be required to begin repaying those amounts to their RRSP until the fifth year after the year in which the withdrawal was made. Full repayment will still have to be made in prescribed amounts and within the required 15-year repayment period.
Extended amortization on new build purchases by first-time buyers
For all but the most fortunate first-time home buyers, purchasing a home means borrowing money to cover the difference between the down payment amount and the total purchase price of the home. For most, that means taking out a mortgage which must be repaid in specified amounts over a specified period of time (known as the “amortization period”).
The “standard” repayment or amortization period for residential mortgages is 25 years. Opting for a shorter amortization period means higher mortgage payments and, conversely, where the amortization period is longer than 25 years, the amount of monthly mortgage payments goes down. The recent federal government announcement allows qualifying first-time home buyers, as of August 1, 2024, to extend the amortization (repayment) period for their mortgage to 30 years. Significantly, however, that extended amortization period will be available only to first-time buyers who purchase newly-built homes.
Having the ability to extend the amortization period in this way will have two benefits. First, of course, having lower mortgage payments will ease the financial stress of first-time home ownership. As well, first-time home buyers who opt for a 30-year amortization period and therefore have smaller monthly mortgage payments will likely also find it easier to qualify for more mortgage financing. When assessing the creditworthiness of a mortgage financing applicant, one of the metrics used by a lender is the percentage of income required to meet monthly mortgage payments, along with other debt repayment obligations (car payments, credit card debt, etc.). Where monthly mortgage payment amounts are reduced by an extended amortization period, the percentage of income which the prospective home buyer must allocate to debt repayment goes down, meaning that their creditworthiness, and the amount of mortgage financing for which they qualify, may increase.
Each of these measures is intended to help qualifying first-time home buyers get into the housing market, and each will undoubtedly have that effect. However, as with nearly all financial and tax planning strategies, there are potential downsides which have to be considered. Withdrawing funds from an RRSP inevitably reduces the amount of investment income which those funds can earn, and ultimately means reduced retirement savings over the long term. Extending an amortization period reduces monthly mortgage payments but will mean that, over the long run, the total amount of interest paid will be much higher. Each prospective homeowner will have to determine what the “right” course of action is, based on their individual circumstances. Some help with that determination can be found on the website of the Financial Consumer Agency of Canada at https://www.canada.ca/en/financial-consumer-agency/services/mortgages.html, where detailed information on the ins and outs of financing a home purchase (including online calculators) is provided.
More information on the budget measures is available on the Finance Canada website at https://budget.canada.ca/2024/report-rapport/chap1-en.html#s1-2.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most Canadians rarely have reason to interact with the tax authorities, and for most people, that’s the way they like it. In the vast majority of cases, Canadians file their tax returns each spring, receive their refund or pay any balance of taxes owing, and forget about taxes until filing season rolls around the following year.
Most Canadians rarely have reason to interact with the tax authorities, and for most people, that’s the way they like it. In the vast majority of cases, Canadians file their tax returns each spring, receive their refund or pay any balance of taxes owing, and forget about taxes until filing season rolls around the following year.
In many cases, however, things don’t run that smoothly, and it’s necessary for the Canada Revenue Agency to contact a taxpayer, to request additional information or seek confirmation of a deduction or credit amount claimed on the return. As our tax system is a self-assessing one, and nearly all returns are filed by electronic means (in which no receipts or other documentation are filed) it’s not surprising that the CRA would need to follow up with some taxpayers with respect to tax matters.
The difficulty for such taxpayers is that a communication – a letter or unsolicited telephone call purporting to be from the CRA – might be legitimate, or it might be part of a scam seeking to defraud the taxpayer. A legitimate communication from the tax authorities can’t be ignored, but clicking on a link in a fraudulent text or email, or providing personal financial information to a scammer over the phone (or worse, sending money), could be disastrous for the taxpayer. And, to add to the difficulties, scammers have become more and more sophisticated in their approaches. A fraudulent phone call from a scammer might show a legitimate CRA phone number on the recipient’s call display, leading him or her to conclude that the call is in fact from the Agency. And, according to the CRA, some fraudulent text messages now include images taken from Government of Canada social media accounts to make their scam messages look more legitimate.
The CRA is well aware of these problems, as tax frauds and scams have become so pervasive that on occasion CRA employees who contact taxpayers on genuine CRA business have had difficulty convincing the recipients of such calls that the call is a legitimate one. To address this problem, the Agency has posted information on its website on how (and how not) to make that determination. The Agency’s goal is two-fold: the first, of course, is to help taxpayers avoid becoming yet another victim of such frauds; the second is to prevent situations in which taxpayers ignore legitimate communications from the Agency, having dismissed them as just another phishing or scam attempt.
To help taxpayers verify that a contact is legitimately from the CRA, the Agency utilizes a number of strategies and security measures. First, any initial contact from the CRA will usually be by way of letter or phone call. The CRA does not send or receive emails or texts containing confidential personal tax information, or communicate with taxpayers on such matters through social media. When the CRA wants to initiate contact with a taxpayer who has not registered for the CRA service My Account, it will send the taxpayer a letter by regular mail, or will contact the taxpayer by phone call. Taxpayers who have registered for My Account may receive an email from the CRA letting them know that there is a communication for them to view in their online CRA account. The taxpayer will then be able to access any letters or electronic communication from the Agency on the CRA website, but only after signing into My Account. My Account, like all of the CRA’s online services, now requires user ID, password, and multi-factor authentication.
Where an unsolicited contact from the CRA to an individual taxpayer is made by telephone, it can be difficult to determine whether that unfamiliar voice on the telephone is in fact a CRA employee (remembering that call display is no longer an effective means of determining whether the call is actually from the Agency).
The Agency suggests that where the taxpayer wishes to verify that the call is in fact from a CRA employee (which is always the best approach when receiving any such phone call), that they take the following steps to ensure that that is the case.
- Tell the caller you would like to first verify their identity.
- Request and make a note of their:
- name,
- phone number, and
- office location.
Not infrequently, a taxpayer will contact the CRA through one of its individual or business tax help lines, which are answered by call centre agents. Each of those telephone services offers an automated callback service – when wait times reach a certain threshold, the taxpayer is given the option of receiving a callback rather than continuing to wait on hold. Where the taxpayer chooses the callback option, they are provided with a randomized four-digit confirmation number. The CRA call centre agent who returns the taxpayer’s call will repeat that number, so that the taxpayer can be certain that it is a CRA employee who is calling.
Finally, there are some actions which, if taken by anyone purporting to be from the CRA, should lead the taxpayer to immediately end the telephone call or delete the text or email, including the following:
- the caller does not give proof of working for the CRA, for example, their name and office location;
- the caller pressures the taxpayer to act now, uses aggressive language, or issues threats of arrest, deportation, or sending law enforcement;
- the caller asks for information that the taxpayer would not enter on his or her return – for example, a credit card number; or
- the caller recommends that the taxpayer apply for benefits, or offers to apply for benefits on the taxpayer’s behalf.
Any unsolicited email or text which purports to be from the CRA should be immediately deleted WITHOUT clicking on any links. The only instances in which the CRA will email a taxpayer is to notify them that something is available for them to view in their online CRA account (which requires log-in with ID, password, and multi-factor authentication). The Agency will also email a form or publication where the taxpayer has previously requested it during a call or a meeting with a CRA agent. Information on how to ensure that such an email is legitimate can be found on the Agency’s website at What to expect when the Canada Revenue Agency contacts you - Canada.ca.
Finally, a CRA representative will never
- demand immediate payment from the taxpayer by any of the following methods:
- Interac e-transfer,
- cryptocurrency (Bitcoin),
- prepaid credit cards,
- gift cards from retailers such as iTunes, Amazon, or others;
- ask the taxpayer for a fee to speak with a contact centre agent;
- set up a meeting in a public place to take a payment from the taxpayer;
- leave voicemails that are threatening to the taxpayer, or that include the taxpayer’s personal or financial information; or
- send an email or text message with a link to the taxpayer’s refund.
While scams and frauds and their perpetrators have been around for literally centuries, changes in how we communicate and how we conduct our financial affairs have made it significantly easier to carry out such deceptions. Most taxpayers are now accustomed to and at ease with conducting much of their personal and financial lives online, and replying instantly to any communication has become the norm. And even newer technology, like AI, poses additional threats for the future.
In such an environment, the best protection for a taxpayer who has received an unsolicited communication purporting to be from the CRA is to do … nothing, in the moment. Responding immediately without taking the time to assess and verify the legitimacy of the communication is exactly the response the scammers count on and profit from. (As well, any communication which requires the taxpayer to act immediately with respect to a tax matter is almost certainly fraudulent – if the CRA contacts a taxpayer requesting information or documentation, or payment, a reasonable time period in which to respond will be provided and a date by which that response is required will be specified as part of the communication.) The taxpayer’s best protection is to double check in order to verify the legitimacy of any unsolicited contact received with respect to matters of tax or personal finances. Doing so is no longer just prudent, it’s a necessity.
More information on how to avoid become the victim of a tax scam can be found on the CRA website at Security and privacy of your information with the CRA - Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of hoping for the best and fearing the worst.
Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of hoping for the best and fearing the worst.
Most taxpayers are, of course, hoping for a refund – the bigger the better. And in most cases that hope is realized. Of the approximately 6 million tax returns filed with the Canada Revenue Agency between February 8 and March 18 of this year, 65% resulted in the payment of a refund to the taxpayer, while only 15% resulted in a balance owed to the Canada Revenue Agency. (The remaining 20% were nil returns.) However, while only a small percentage of returns put the taxpayer in the position of owing money to the government, that’s not much consolation to the taxpayers who find themselves in that situation.
The worst-case scenario, for all taxpayers, is to find out that they are faced with a large tax bill and an imminent payment deadline, and that they just don’t have the money to make the required payment by that deadline. This year, that deadline is Tuesday April 30, 2024 for ALL individual taxpayers (including self-employed taxpayers and their spouses who don’t actually have to file their returns for 2023 until June 15, 2024). That payment deadline is inflexible and, where payment in full is not made on or before April 30, 2024, interest charges on any unpaid balance will be levied by the Canada Revenue Agency beginning on May 1, 2024. Interest charges levied by the CRA tend to add up quickly, for two reasons. First, the interest charged by the CRA on outstanding tax amounts is, by law, higher than current commercial rates – the rate charged from April 1 to June 30, 2024 is 10.0%. Second, interest charges levied by the CRA are compounded daily, meaning that each day interest is levied on the previous day’s interest charges. It is for these reasons that a taxpayer is, where at all possible, likely better off arranging private borrowing in order to pay any taxes owing by the April 30, 2024 deadline.
Where the taxpayer can’t pay his or her tax bill out of current resources and is unable to borrow the funds to do so, there is another option. Like most creditors, the CRA would rather get paid on time and in full, but the Agency’s ultimate goal is to collect the full amount of taxes owed. If a tax bill can’t be paid, in full or in part, out of either current resources or private borrowing arranged by the taxpayer, the Canada Revenue Agency is open to making a payment arrangement with that taxpayer, providing him or her with the option of paying an amount owed over time, plus interest.
There are two avenues available to taxpayers who want to propose such a payment arrangement. The first is a call to the CRA’s automated TeleArrangement service at 1-866-256-1147. When making such a call, it is necessary for the taxpayer to provide their full name and address, date of birth, and social insurance number, and to have the Notice of Assessment for the last tax return for which they were filed and assessed. For taxpayers who are up to date on their tax filings, that will be the Notice of Assessment for the return for the 2022 tax year. The TeleArrangement Service is available Monday to Friday, from 7 a.m. to 10 p.m., Eastern time.
Taxpayers who would rather speak directly to a CRA client services agent can call the Agency’s debt management call centre at 1-888-863-8657 from 7 a.m. to 8 p.m. Eastern Time Monday to Friday, or can complete an online form (available at https://apps.cra-arc.gc.ca/ebci/iesl/showClickToTalkForm.action) requesting a callback from a CRA agent.
Finally, regardless of the taxpayer’s circumstances, there is one strategy which is, in all circumstances, a bad one. Taxpayers who can’t pay their tax bill by the deadline sometimes conclude that there is no point in filing if payment can’t be made. That’s the wrong decision, and also a costly one. Where an amount of tax is owed and the return isn’t filed on time, there is an immediate tax penalty imposed of 5% of the outstanding tax amount – and interest charges start accruing on that penalty amount (as well as on the outstanding tax balance) immediately. For each full month that the return isn’t filed, a further penalty of 1% of the outstanding tax amount is charged, to a maximum of 12 months. Higher penalty amounts are charged, for a longer period, where the taxpayer has incurred a late-filing penalty within the past three years. In the worst-case scenario, the total penalty charges can reach 50% of the tax amount owed – and that doesn’t count the compound interest which is levied on all penalty amounts, as well as on all unpaid taxes. In all cases, no matter what the circumstances, the right answer is to file one’s tax return on time.
Detailed information on the options available to taxpayers who can’t pay their taxes on time and in full can be found on the CRA website at Call us if you can't pay in full or on time - Debt collection at the CRA - Canada.ca and https://www.canada.ca/en/revenue-agency/services/payments-cra/payment-arrangements.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Our tax system is, for the most part, a mystery to individual Canadians. The rules surrounding income tax are complicated and it can seem that for each and every rule there is an equal number of exceptions or qualifications. There is, however, one rule which applies to every individual taxpayer in Canada, regardless of location, income, or circumstances, and of which most Canadians are aware. That rule is that income tax owed for a year must be paid, in full, on or before April 30 of the following year. This year, that means that individual income taxes owed for 2023 must be remitted to the Canada Revenue Agency (CRA) on or before Tuesday April 30, 2024. No exceptions and, absent extraordinary circumstances, no extensions.
Our tax system is, for the most part, a mystery to individual Canadians. The rules surrounding income tax are complicated and it can seem that for each and every rule there is an equal number of exceptions or qualifications. There is, however, one rule which applies to every individual taxpayer in Canada, regardless of location, income, or circumstances, and of which most Canadians are aware. That rule is that income tax owed for a year must be paid, in full, on or before April 30 of the following year. This year, that means that individual income taxes owed for 2023 must be remitted to the Canada Revenue Agency (CRA) on or before Tuesday April 30, 2024. No exceptions and, absent extraordinary circumstances, no extensions.
It is very much in the CRA’s interest to make paying taxes as simple and as straightforward as it can be, and so the Agency offers individual taxpayers a wide range of choices when it comes making that payment. There are, in fact, no fewer than seven separate options available to individual residents of Canada in paying their taxes for the 2023 tax year. The first four options outlined below involve payment by electronic means, while the last three describe those available to taxpayers who would prefer to make their payments in person, or by mailing a cheque to the CRA.
Pay using online banking or ATM
Millions of Canadians transact most or all of their banking using the online services of their particular financial institution and/or at an ATM of the financial institution. The list of financial institutions through which a payment can be made to the Canada Revenue Agency is a lengthy one (available at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/pay-online-banking.html), and includes all of Canada’s major banks and credit unions.
The specific steps involved in making that payment will differ slightly for each financial institution, depending on how their online payment systems or ATM systems are configured. In most cases, it is necessary to have the Canada Revenue Agency listed as a payee on one’s online banking or ATM arrangements.
It’s important as well to remember that the nature of the payment – i.e. current year tax return, as distinct from current year tax instalment payments – must be specified, and the taxpayer’s social insurance number must be provided, in order to ensure that the payment is credited to the correct account, for the correct taxation year.
It’s not necessary to access any particular CRA form in order to make an online payment of taxes through one’s financial institution.
Using the CRA’s My Payment
The CRA also provides an online payment service called My Payment. There is no fee charged for the service, and it’s not necessary to be registered for any of the CRA’s other online services in order to use My Payment.
What is necessary is that the taxpayer have an activated debit card with an Interac Debt, VISA Debit, or Debit MasterCard logo from a participating Canadian financial institution, as My Payment is set up to accept payment using only those cards. Credit cards cannot be used to make a payment through My Payment. Anyone intending to use My Payment should also confirm that the amount of any payment to be made is within the transaction limits imposed by their particular financial institution.
A list of participating financial institutions for each type of card, and more details on how to use this payment method, can be found at https://www.canada.ca/en/revenue-agency/services/e-services/payment-save-time-pay-online.html.
Payment by credit card, PayPal, or Interac e-transfer
While it’s possible to pay one’s taxes using a credit card, PayPal, or Interac e-transfer, such payments can only be made through third-party service providers (that is, payments by those methods cannot be made directly to the Canada Revenue Agency), and such third-party service providers will impose a fee for the service.
The CRA website indicates that there is currently only one such third party service provider – Pay Simply – which can process and remit individual income tax amounts owed through credit card, PayPal, or Interac e-transfer.
Details of making an income tax payment through a third-party service provider can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/pay-credit-card.html.
Payment by pre-authorized debit
It’s possible to set up a pre-authorized debit (PAD) arrangement with the CRA, authorizing the Agency to debit the taxpayer’s bank account for an amount of taxes owed, on dates specified by the taxpayer.
Individuals who make instalment payments of tax throughout the year may already have such an arrangement in place and can certainly use that existing arrangement to arrange a PAD of any balance of taxes owed for the 2023 tax year. However, any such arrangement must be made at least five business days before the payment due date of April 30. A taxpayer who makes a payment of taxes only once a year is likely better off using another of the available payment methods.
There is also another option for taxpayers who have their return prepared and E-FILED by an authorized electronic tax filer. Such taxpayers can have that E-FILER set up a PAD agreement on their behalf in order to make a “one-time” payment for a current year tax amount owed. Such an arrangement is used only for the payment of a current year (i.e., 2023) tax balance, and can’t be used for other payments like instalment payments of tax. Details on how to set up a pre-authorized debit arrangement, whether for a single payment or for recurring payments, are outlined on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/pay-authorized-debit.html.
Paying in person at your financial institution
For those who don’t use online banking, or simply prefer to make a payment in person, it’s possible to pay a tax amount owed at the bank. Doing so, however, requires that the taxpayer have a specific personalized remittance form – the T7DR, Amount owing Remittance Voucher.
If the taxpayer has not received the required remittance form from the Canada Revenue Agency, it’s possible to download and print the form from the CRA website. Instructions on how to do so can be found on that website at https://www.canada.ca/en/revenue-agency/services/forms-publications/request-payment-forms-remittance-vouchers.html, and detailed information on how to make the payment is available on the same website at Pay at the counter (teller) at a bank or credit union - Payments to the CRA - Canada.ca.
Paying at a Canada Post outlet
All Canada Post retail outlets can receive payments of individual income tax balances owed, in cash or by debit card, and will charge a fee for this service. Once again, however, it’s necessary to have a specific form to do so.
In this case, the taxpayer must have a QR code which contains the information needed for the CRA to credit the amount paid to the taxpayer’s account.
While a QR code is sometimes included on remittance forms sent to the taxpayer by the CRA, it’s also possible to generate a QR code online through the CRA website. A link to instructions on how to do so can be found on that website at https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/pay-canada-post.html.
Paying by cheque
While it’s not as common anymore, it’s still possible to pay any tax balance owed on filing by cheque, as outlined on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/pay-cheque.html.
Such cheques are made payable to the Receiver-General for Canada, and are mailed, together with the required remittance form (T7DR – Amount Owing Remittance Form) to the Canada Revenue Agency, using the address found on the back of the payment remittance form. Such payments can also be dropped off at a Canada Revenue Agency dropbox location (a listing of such locations can be found on the CRA website at CRA Office and dropbox locations - Canada.ca). As is the case with payments made at a financial institution, the taxpayer can print the required remittance form from the CRA’s website. Instructions on how to do so can be found at https://www.canada.ca/en/revenue-agency/services/forms-publications/request-payment-forms-remittance-vouchers.html.
The CRA also suggests that, where payment of taxes owing is made by cheque, the taxpayer should include his or her social insurance number on the memo line found on the front of the cheque, and indicate the type of payment being made (that is, 2023 tax balance). Doing so will help ensure that the payment is credited to the correct account.
A decision on what method to use to pay one’s taxes includes another important consideration of which most taxpayers are unaware. Under longstanding Canada Revenue Agency policy, the CRA considers that a payment is actually made on the date on which it is received by the Agency. However, depending on the payment method chosen, that date of receipt often isn’t the same day the payment is made by the taxpayer, and it can be as much as several days later. And, of course, where payment is made close to the payment deadline, that delay can mean the difference between a timely payment and one that is late and incurs interest charges.
Helpfully, the Canada Revenue Agency provides information, for each payment method, on how the date of receipt is determined for that particular method. That information can be found on the CRA’s website at Canada Revenue Agency https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/make-payment.html. Taxpayers who have delayed making a payment until April 30 should be aware that the only two payment methods for which payment is always considered to have been received by the CRA on the same day it is made are payment at the counter at one’s financial institution (not at an ATM) or payment at a Canada Post location. In both cases, the remittance voucher will be date-stamped with the current day’s date, and the CRA will consider payment to have been made on that day, regardless of when it actually receives the funds.
Finally, once payment has been made, by any payment method, the CRA provides taxpayers with an online method for confirming that a payment has been received and applied to the taxpayer’s account. That service is available at https://www.canada.ca/en/revenue-agency/services/payments-cra/confirm-payment.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
No one likes paying taxes, but for taxpayers who live on a fixed income having to pay a a large tax bill can mean real financial hardship – and the majority of Canadians who live on fixed incomes are, of course, those who are over 65 and retired. Adding to their financial stress is the reality that such individuals have been coping, for the past two years, with inflationary increases in the cost of just about all goods and services, especially food and shelter.
No one likes paying taxes, but for taxpayers who live on a fixed income having to pay a a large tax bill can mean real financial hardship – and the majority of Canadians who live on fixed incomes are, of course, those who are over 65 and retired. Adding to their financial stress is the reality that such individuals have been coping, for the past two years, with inflationary increases in the cost of just about all goods and services, especially food and shelter.
Fortunately, the Canadian tax system recognizes and addresses these realities by providing a number of tax deductions and credits which are available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit). In addition, tax deductions or credits are available to help offset the kinds of costs – like medical costs – which are more often incurred by older Canadians. What follows is an outline of some of the most common such deductions and credits which may be claimed by those over 65 on the return for the 2023 tax year.
Age credit
All Canadians who were age 65 or older at the end of 2023 can claim the age credit on their tax return for the year. For 2023, that credit amount is $8,396 which, when converted to a tax credit, reduces federal tax by $1,259.40.
While the age credit can be claimed by anyone aged 65 or older, the amount of credit claimable is reduced where the taxpayer’s income for 2023 was more than $42,335. Where that is the case, the available credit is reduced by 15% for each dollar of income over that $42,335 threshold amount.
Pension income credit
Most Canadians who are aged 65 or older receive income some kind of private pension income which would qualify for the pension income credit. For purposes of that credit, amounts received from an employer-sponsored pension plan qualify, but so too do amounts received from a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF). Amounts received from government-sponsored retirement income plans (like the Canada Pension Plan (CPP) or Old Age Security (OAS)) do not, however, qualify.
Where the taxpayer receives amounts that qualify as pension income for purposes of the pension income credit, the first $2,000 of such income is effectively exempt from federal tax. In addition, unlike the age credit, the total income of the taxpayer does not limit a claim for the pension income credit in any way.
Pension income splitting
Pension income splitting is a tax strategy which allows married taxpayers who are over the age of 65 to split eligible pension income between them, in order to obtain the best possible overall tax result.
The general rule with respect to pension income splitting is that a taxpayer who receives private pension income during the year is entitled to allocate up to half that income (without any dollar limit) to their spouse for tax purposes. In this context, private pension income means a pension received from a former employer and, where the income recipient is age 65 or older, payments from an annuity, an RRSP, or an RRIF. Government source pensions, like the CPP, Québec Pension Plan (QPP), or OAS payments do not qualify for pension income splitting, regardless of the age of the recipient.
The mechanics of pension income splitting are relatively simple. There is no need to transfer funds between spouses or to make any change in the actual payment or receipt of qualifying pension amounts, and no need to notify a pension administrator. Taxpayers who wish to split eligible pension income received by either of them must each file Form T1032 Joint Election to Split Pension Income (T1032 E (23)) with their annual tax return. That form, which is not included in the annual tax return package, can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1032.html or can be ordered in large print format by calling 1-800-959 8281.
The tax saving strategies outlined above can be claimed by any taxpayer who meets the basic eligibility requirements (age, type of income, marital status, etc.) for the credit. Other types of deductions or credits require that the taxpayer incur a particular kind of expenditure which can then be claimed on the annual return, with that claim reducing the amount of federal tax payable for the year.
Not infrequently, taxpayers incur such expenditures but do not receive the available tax benefit because they are unaware that a credit or deduction is available to be claimed. Almost every taxpayer, for instance, incurs medical expenses or makes charitable donations in the course of a year, both of which can be eligible for a tax credit claim. And while the Canada Revenue Agency will correct basic arithmetical errors made on a return, it does not (and cannot) ensure that the taxpayer has claimed all the deductions and credits to which they are entitled on the return for the year.
As well, most of the credits which are available to reduce federal tax payable can also be claimed for provincial tax purposes, with the amount of the available provincial tax savings determined by the taxpayer’s province of residence. Finally, many of the provinces also offer tax saving opportunities to residents who are over the age of 65 through programs such as property tax credits for senior homeowners or tax credits for expenditures related to increasing safety or mobility for an individual over the age of 65 who lives in his or her own home.
Most Canadians do not prepare their own tax returns, and it's not reasonable to expect individuals (of any age) who don’t spend their working lives immersed in the intricacies of the Canadian tax system to be aware of the myriad of deductions and credit claims which may be available to them to help lower their tax bill. There is, however, help to be had with the tax return preparation process through free tax clinics which will prepare a return for the taxpayer at no cost, and can help to ensure that all available tax deductions and credits are claimed. Those tax return preparation clinics are operating now and a listing of such clinics can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/community-volunteer-income-tax-program/need-a-hand-complete-your-tax-return.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
For the past two years, Canadians have had to continually adjust their household budgets to accommodate price increases for nearly all goods and services. The impact of rising prices is felt most by those who are living on a fixed income and who, of necessity, spend a larger than average share of their income on non-discretionary expenditures like housing and food. And, while such individuals and families can be found in all age groups, retirees make up the largest Canadian demographic who live on such fixed incomes.
For the past two years, Canadians have had to continually adjust their household budgets to accommodate price increases for nearly all goods and services. The impact of rising prices is felt most by those who are living on a fixed income and who, of necessity, spend a larger than average share of their income on non-discretionary expenditures like housing and food. And, while such individuals and families can be found in all age groups, retirees make up the largest Canadian demographic who live on such fixed incomes.
For many Canadian retirees, benefits received from the Canada Pension Plan (CPP) and Old Age Security (OAS) make up a significant portion of their annual income. And while such benefit amounts are indexed to inflation, those inflationary increases in benefits are tied to the overall rate of inflation. For the past two years, however, the cost of non-discretionary goods and services – especially housing and food – has risen much faster than the general rate of inflation. Consequently, such increases have outstripped the amount by which CPP and OAS benefits have been increased to account for inflation. Price increases in the cost of food purchased from stores were, in fact, higher than the overall rate of inflation in every month between December 2021 and November 2023 – in some months, nearly three times the overall inflation rate.
It must seem to Canadian retirees that there just aren’t many good options when it comes to generating the cash flow needed to cover ever-increasing costs for non-discretionary expenditures. Fortunately, however, the roughly 75% of Canadians over the age of 60 who own their own homes (based on Statistics Canada’s figures for 2021) do have options. Canadians who are now of retirement age and own their homes most likely purchased those homes many years, or even decades, ago and have, consequently, built up significant equity. In the current economic circumstances, that equity has made them house-rich and cash-poor. And that equity can now provide an ongoing source of retirement income – through a home equity line of credit or a reverse mortgage.
The home equity line of credit (or HELOC), as the name implies, is a line of credit which permits the homeowner to borrow up to a pre-set limit based on the current market value of their home. Such borrowings can be in any amount (up to, of course, the limit on the HELOC) and can be made at any time and for any purpose. Typically, the interest rate charged on a HELOC is a variable rate – usually one half or one per cent more than the prime rate used by the lender. There is, however, a significant feature of the HELOC of which potential borrowers must be aware. While there is generally no obligation to repay amounts borrowed from a HELOC until either the death of the homeowner or until the house is sold, borrowers are required to pay interest each month on the total amount borrowed.
Take, for example, a couple who own a house currently valued at $750,000. Assume that the couple obtain a HELOC based on that home value and borrow $1,000 each month ($12,000 annually) from the HELOC to help meet current cash flow shortfalls. At an interest rate of 8.70%, they will be obliged to make an interest payment of approximately $87 per month on that $12,000 borrowing. As the amount of HELOC indebtedness increases over time, or the interest rate charged goes up, the amount of those required monthly interest payment obligations will, of course, also increase.
The other option open to homeowners to provide cash flow is a reverse mortgage. Like the HELOC, a reverse mortgage allows homeowners to borrow based on the market value of their property. A reverse mortgage is also similar to a HELOC in that borrowers can borrow a lump sum amount, or can opt to structure the reverse mortgage as a series of payments which will provide a regular income stream, or some combination of the two. And, as with a HELOC, no repayment of the funds advanced under a reverse mortgage is required until the death of the homeowner, or until they leave or sell the home.
The basic advantage of a reverse mortgage over a HELOC is that no payments of interest are required under a reverse mortgage. However, homeowners need to consider the impact that advantage can have over time. Once the reverse mortgage is taken out, interest will, of course, be levied on all amounts provided, and will accumulate from the time the funds are first advanced. Total interest costs can add up very quickly and reach significant amounts by the time the debt is eventually to be repaid, usually out of the proceeds from the sale of the house. And, of course, every dollar of funds advanced and interest levied eats away at the amount of equity which the homeowner has built up, on a dollar-for-dollar basis. By contrast, with a HELOC, where accrued interest charges must be paid monthly, the amount of debt (and consequent reduction in equity) will never be greater than the principal amount borrowed. Finally, under the terms of many reverse mortgages, a prepayment penalty is levied where the homeowner moves or sells the house within a few years of obtaining the reverse mortgage – the exact time frame will depend on terms provided by the particular lender. With a HELOC, however, repayment of the outstanding balance can be made in part or in full at any time, without penalty.
As is almost always the case with financial issues, there is no one right answer or even a one-size-fits-all answer, as the “correct” answer is always based on the particular financial and life circumstances of the individuals involved. Some help with making a decision on whether a HELOC or a reverse mortgage makes sense in one’s circumstances can be found on the website of the Financial Consumer Agency of Canada at https://www.canada.ca/en/financial-consumer-agency/services/mortgages/borrow-home-equity.html, where the benefits and downsides of each option are outlined in detail.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Most Canadians don’t turn their attention to their taxes until sometime around the end of March or the beginning of April, in time to complete the return for 2023 ahead of the April 30, 2024 filing deadline.
Most Canadians don’t turn their attention to their taxes until sometime around the end of March or the beginning of April, in time to complete the return for 2023 ahead of the April 30, 2024 filing deadline.
While that approach leaves plenty of time to get the return prepared and filed, it also means that the most significant opportunities to reduce or minimize the tax bill for 2023 are no longer available. Almost all such tax planning or saving strategies, in order to be effective for 2023, must have been implemented by the end of that calendar year.
The fact that the clock has run out on most major tax planning opportunities for 2023 does not, however, mean that there are no tax-saving strategies left. At this point, there are a couple of ways to minimize the tax hit for 2023 – by claiming all available deductions and credits on the return, and also by making sure that those deductions and credits are structured and claimed in the way which will give the taxpayer the greatest tax benefit.
In some cases, a claim for a tax deduction or credit can only be made on the return for the year in which the expense is incurred; in other cases, claims can be made for expenses incurred in the previous tax year or even as far back as five years previously. Consequently, getting the best tax result on one’s return requires an assessment of which deductions and credits are available to claim in the current year, whether some or all of them can be carried forward and claimed in a future year, and whether it makes sense to do so. It may seem counterintuitive, or even illogical, to not claim every available deduction and credit in order to obtain the best possible tax result for the year. However, in some cases (albeit for different reasons) there are situations in which it makes sense to defer an available claim to a future year, or to transfer the claim to another family member.
Charitable donations
Taxpayers are entitled to make a claim on the annual tax return for charitable donations made in the current (that is, 2023) year or any of the previous five years. The reason it can sometimes makes sense not to claim a charitable donation in the year it was made arises from the way in which the charitable donations tax credit is structured to order to encourage higher donations.
That credit, at both the federal and provincial/territorial levels, is a two-tier credit. Federally, the first $200 in donations receives a credit of 15% of the total donation, or $30. However, donations above the $200 level receive a credit equal to 29% of the donation amount over $200.
Take, for example, a taxpayer who makes a regular contribution to a favourite charity of $100 each month, or $1,200 per year. Where he or she claims that donation on the annual return each year, that claim will result in a federal credit of $320 ($200 times 15%, plus $1,000 times 29%). Where, however, the same taxpayer defers the claim to the following year and claims a total of $2,400 in donations on a single return, he or she will receive a federal credit of $668. ($200 times 15%, plus $2,200 times 29%). Where the donations are accumulated and claimed once every five years, the federal credit received will be $1,712 ($200 times 15%, plus $5,800 times 29%). Under each scenario, the total charitable donation made is the same, but the amount of credit received increases with each year that the claim is deferred. Since each of the provinces and territories provide a two-tier credit (at different rates, depending on the jurisdiction), the same result will be seen when calculating the provincial/territorial credit.
It's important to note as well that charitable donations made by either spouse can be combined and claimed on the return for one of those spouses, thereby increasing the amount of charitable donations available to claim and possibly the amount of credit which can be received.
Medical expenses
Notwithstanding our publicly-funded health care system, there are a great (and increasing) number of medical and para-medical expenses for which coverage is not provided and which must be paid on an out-of-pocket basis. In many instances, it’s possible to claim a medical expense tax credit for those out-of-pocket costs.
The federal credit for such expenses is 15% of allowable expenses. As is usually the case, the provinces and territories also provide a credit for the same expenses, albeit at different rates.
Many taxpayers, with some justification, find the rules on the calculation of a medical tax credit claim confusing. First, there is an income threshold imposed. Medical expenses eligible for the credit are qualifying expenses which exceed 3% of net income, or (for 2023) $2,635, whichever is less. Put more practically, for 2023 taxpayers who have net income of $87,850 or more can claim medical expenses incurred over $2,635. Those with lower incomes can claim medical expenses which exceed 3% of that lower net income. For instance, a taxpayer having $35,000 in net income could claim qualifying medical expenses incurred over $1,050 (3% of $35,000).
The other aspect of the medical expense tax credit which can be confusing is the calculation of the optimal time period. Unlike most credit claims, the medical expense tax credit can be claimed for qualifying expenses which were paid in any 12-month period ending during the tax year. While confusing, such rule is beneficial, in that it allows taxpayers to select the particular 12-month period during which medical expenses (and therefore the resulting credit claim) is highest. The only restrictions are that the selected 12-month period must end during the calendar year for which the return is being filed and, of course, any expenses which were claimed on a previous return cannot be claimed again.
While only expenses which exceed the $2,635/3% threshold may be claimed, it’s also possible to aggregate expenses incurred within a family and make a single claim for those expenses on the return of one spouse. Specifically, the rules allow families to aggregate medical expenses incurred for each spouse and for each child who was under the age of 18 at the end of 2023. While medical expenses incurred by a single family member might not be enough to allow them to make a claim, aggregating those expenses is very likely (especially for a family that does not have private medical insurance coverage) to mean that total expenses will exceed the applicable threshold.
In determining who will make the medical tax credit claim for a family, there are two points to remember. Since total medical expenses claimable are those which exceed the 3% of net income/$2,635 threshold, whichever is less, the greatest benefit will be obtained if the spouse with the lower net income makes the claim for total family medical expenses. However, the medical expense credit is a non-refundable one, meaning that it can reduce tax otherwise payable, but cannot create (or increase) a refund. Therefore, it’s necessary that the spouse making the claim have tax payable for the year of at least as much as the credit to be obtained, in order to make full use of that credit.
Finally, there are a huge number and variety of medical expenses which individuals and families may incur, and the rules governing which can be claimed and in what circumstances are very specific. In some cases, for instance, a doctor’s prescription will be required, while in others it will not. The very long list of medical expenses eligible for the credit, and any ancillary requirements, such as a prescription, can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
While owning one’s own home brings with it many intangible benefits, home ownership also provides some very significant financial advantages. Specifically, it provides the opportunity to accumulate wealth through increases in home equity, and to realize that wealth on a truly tax-free basis.
While owning one’s own home brings with it many intangible benefits, home ownership also provides some very significant financial advantages. Specifically, it provides the opportunity to accumulate wealth through increases in home equity, and to realize that wealth on a truly tax-free basis.
Anyone who was fortunate enough to purchase a home more than 10 or 15 years ago likely now owns a property which has a current market value of many times more than the original purchase price. The real benefit of such asset growth, however, is found in the way such increases in value are treated for tax purposes.
The Canadian tax system is a very comprehensive one, and there are very few sources of income, property or investment income which escape the tax net. Home ownership is one of those few exceptions. Under general Canadian tax rules, where an asset is sold, the increase in the value of that asset over its original purchase price is treated as a capital gain, 50% of which must be included in taxable income and taxed as such. However, where a family home is sold, any increase in value (that is, any gain) is exempt from tax, regardless of the amount of such gain. For example, a homeowner who paid $200,000 for a home in 2000 and sold that home in 2023 for $1,000,000 has a gain of $800,000. Assuming that the property was lived in and used as a home (a “principal residence” in tax parlance) for the entire 23 years of ownership, the full $800,000 gain can be received tax-free. If that gain were treated as a capital gain, and taxed as such, approximately $200,000 of the gain would have to be paid in capital gains tax.
The tax-free status of gains made on the sale of a family home is known, for tax purposes, as the principal residence exemption (PRE) and has been available to Canadians for many decades. For many years after the introduction of the PRE there were no changes made to the rules governing the availability of the exemption, or the reporting requirements for claiming it. In the last eight years, however, and especially in 2023, the rules with respect to the availability of the exemption have been tightened.
The need for changes arose out of a perceived change in the way the housing market operated, resulting from unprecedented increases in the price of residential properties over a relatively short period of time. While there are have always been individuals or companies who purchased properties with the intent of reselling them, perhaps after undertaking renovations, most purchases of residential real estate were made by individuals or families intending to live in them. However, it became possible, over the past 10 or 15 years, to purchase a property and re-sell it relatively soon thereafter for a very substantial profit. And, where the PRE was claimed on that sale, the entire profit would be received tax-free.
These changes in the housing market led to what the federal government perceived as a situation in which housing was being bought and sold as a commodity rather than for its traditional purpose of providing a home, and that the PRE was being used to avoid the payment of profits made from the “flipping” of properties in a way that was never intended. A secondary effect of such “commodification” of residential real estate was to drive up the price of properties, putting home ownership further and further out of the reach of the average Canadian.
For both these reasons, the federal government moved, in 2016 and again in 2023, to make changes to ensure that the principal residence exemption was being used for its intended purpose, and only by those who were entitled to claim it.
The first such change, which took effect as of January 1, 2016, was an administrative measure which required taxpayers, for the first time, to report any transaction for which the PRE was being claimed. Beginning with the 2016 tax year, individuals who are claiming the PRE for a property sale which took place during the year are required to complete Schedule 3 on their tax return for the year, confirming that fact and indicating the tax years for which the exemption is being claimed.
The second change made by the federal government with respect to the PRE was much more substantive, and aimed directly at those who, in the government’s view, are misusing the PRE. That change, which is effective as of the 2023 tax year, provides that anyone who sells a property which they have owned for less than 365 days would be considered to be “flipping” properties. Where that is the case, 100% of any gain made on the sale of the property would be included in income and taxed as business income. In other words, not only would the seller of the property not be eligible for the PRE, the gains made on the sale of the property would not be treated as a capital gain (only half of which is included in income for tax purposes) but as business income, the entirety of which is included in income and taxed as such.
The difference in the tax result is best illustrated using the example above. An individual who purchases a property for $200,000 and sells that property for $1,000,000 has a gain of $800,000. The result of the different possible tax treatments of that gain is as follows:
- Where the sale is fully eligible for the principal residence exemption, the total tax payable on the gain is $0;
- Where the gain is treated as a capital gain, the total tax payable on that gain is about $200,000; and
- Where the property sale takes place after 2022, the property was owned for less than 365 days, and the transaction is treated as property flipping, the new rule will apply and the total tax payable on the gain will be about $400,000.
Of course, while most Canadians who purchase a home to live in as a principal residence don’t intend to sell within a year of purchase, life’s circumstances can sometimes dictate a different outcome. Consequently, exemptions from the new tax consequences of selling within 12 months of purchase will be provided for Canadians who sell their home due to certain specified life events.
The rules require that anyone who sold a principal residence during the 2023 tax year must report that sale on page 2 of Schedule 3 of their return for 2023. In that section, the taxpayer is required to designate the property which has been sold as his or her principal residence, and to indicate whether that property has been their principal residence throughout the period of ownership. Where, as in most cases, the number of years of ownership will be identical to the number of years that the property was used as a principal residence, the entire gain realized on the sale of the property will qualify for the principal residence exemption and therefore be non-taxable.
Less often, a taxpayer will have sold a principal residence during 2023 within 12 months of having acquired it. Where that is the case, an additional section of Schedule 3 must be completed, to determine whether the sale does or does not constitute “property flipping”. That section, found on page 3 of Schedule 3, asks the taxpayer to indicate whether he or she sold a housing unit during 2023 within 365 days of acquiring it. Where the answer to that question is “yes” the taxpayer can indicate whether the sale was “due to, or in anticipation of” any one or more of nine different “life events”.
That listing of “life events” is quite extensive, and includes such things as job loss, having an elderly parent come to live with the taxpayer (or the taxpayer moving to care for an elderly parent), illness, and insolvency. And, in addition, it is not necessary for such circumstances to have actually occurred prior to the sale; it is sufficient that the sale have taken place “in anticipation of” the particular life event or events. Where these criteria are satisfied, the sale of a property within 365 days of its acquisition will be considered to not constitute property flipping, and any gain realized on the sale will be exempt from tax under the principal residence exemption (assuming that the taxpayer actually lived in the property during the year he or she owned it).
More information on the rules governing the sale of a principal residence and claiming the exemption on the 2023 tax return can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/sale-your-principal-residence.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
While our tax laws require Canadian residents to complete and file a T1 tax return form each spring, that return form is never exactly the same from year to year. Some of the changes found in each year’s T1 are the result of the indexing of many aspects of our tax system, as income brackets and tax credit amounts are increased to reflect the rate of inflation during the previous year. Other changes, however, arise from the introduction by the federal government of new deductions or credits, changes to the existing rules which govern the availability, amount, or delivery of such deductions or credits, and, inevitably, the end of some tax credit programs.
While our tax laws require Canadian residents to complete and file a T1 tax return form each spring, that return form is never exactly the same from year to year. Some of the changes found in each year’s T1 are the result of the indexing of many aspects of our tax system, as income brackets and tax credit amounts are increased to reflect the rate of inflation during the previous year. Other changes, however, arise from the introduction by the federal government of new deductions or credits, changes to the existing rules which govern the availability, amount, or delivery of such deductions or credits, and, inevitably, the end of some tax credit programs.
This year, most of the changes to be found on the return for 2023 are of a targeted nature, affecting taxpayers who claim specific types of deductions or credits based on their personal or family circumstances. What follows is a summary of the changes which taxpayers will find on the return for 2023, as outlined by the Canada Revenue Agency in its Guide to the 2023 return form.
Multigenerational home renovation tax credit (MHRTC)
The MHRTC is a new refundable tax credit that allows an eligible individual to claim certain renovation costs incurred to create a secondary unit within their home so that an elderly or disabled relative can live with them. Taxpayers who carry out such an eligible renovation can claim up to $50,000 in qualifying expenditures. The credit amount is 15%, meaning that a maximum credit of $7,500 ($50,000 times 15%) can be obtained. Detailed information on eligibility requirements can be found on Schedule 12, Multigenerational Home Renovation Tax Credit, which is used to claim the credit for 2023.
First home savings account (FHSA)
The First Home Savings Account is a new registered plan to help individuals save for their first home on a tax-sheltered basis. Contributions (to a maximum of $8,00 per year and a lifetime maximum of $40,000) made to an FHSA after March 2023 are deductible from income and, where funds are withdrawn from the FHSA to purchase a first home, no tax is payable on the withdrawals. Taxpayers who opened an FHSA in 2023 should complete Schedule 15, FHSA Contributions, Transfers and Activities as part of their return for 2023. Detailed information on the FHSA program can be found on the federal government website at First Home Saving Account.
Property flipping
A Canadian taxpayer who sells the home in which he or she has lived is not required to pay tax on the proceeds of sale from that transaction as the result of the principal residence exemption. Beginning in 2023, however, taxpayers who sell a residential property which they have owned for less than a year will not be entitled to claim that principal residence exemption. In such circumstances, any gain or profit realized on the sale will be treated as business income and taxed in full. (Some exceptions apply where a property held for less than one year is sold owing to a change in life circumstances – i.e., a death, job loss, or illness.) Detailed information on the new “property flipping” rule and those exceptions can be found at Residential Property Flipping Rule.
Federal, provincial, and territorial COVID-19 benefit repayments
During the pandemic millions of Canadians received benefit payments under a number of different government programs. In some instances, benefit payments were made to individuals who were not eligible for a particular benefit, or in amounts which exceeded their benefit entitlement. Over the past couple of years, the federal government has obtained repayment of such benefit overpayments from those individuals. Where, during 2023, a taxpayer repaid COVID-19 benefits received, they can claim a deduction for such repayments on line 23200 of the 2023 tax return.
Deduction for tools (tradespersons and apprentice mechanics)
Tradespersons who earn employment income from their trade are entitled to claim a deduction from that employment income for the cost of eligible tools. As of 2023, the maximum such deduction which may be claimed each year has increased from $500 to $1,000. Detailed information about the tools deductions for tradespersons and apprentice mechanics can be found on the federal government website at Deduction for Tradesperson’s Tools Expense – Canada.ca.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
They can be accessed below.
Corporate:
Personal:
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Each year, the Canada Revenue Agency publishes a statistical summary of the tax filing patterns of Canadians during the previous filing season. The final statistics for 2023 show that the vast majority of Canadian individual income tax returns – just over 92%, or just under 30 million returns – were filed by electronic means, using one or the other of the CRA’s web-based filing methods. About 2.5 million returns – or just under 8% – were paper-filed.
Each year, the Canada Revenue Agency publishes a statistical summary of the tax filing patterns of Canadians during the previous filing season. The final statistics for 2023 show that the vast majority of Canadian individual income tax returns – just over 92%, or just under 30 million returns – were filed by electronic means, using one or the other of the CRA’s web-based filing methods. About 2.5 million returns – or just under 8% – were paper-filed.
Clearly, electronic filing is the overwhelming choice of Canadian taxpayers, and those who choose electronic filing this year have two choices – NETFILE and E-FILE. The first of those – NETFILE (used last year by just under 33% of tax filers) – involves preparing one’s return using software approved by the CRA and filing that return on the CRA’s website, using the CRA’s NETFILE service. The second method – E-FILE – involves having a third party file one’s return online. Almost always, the E-FILE service provider also prepares the return which they are filing. And it seems that most Canadians want to have little to do with the preparation of their own returns, as last year just under 60% of all the individual income tax returns filed came in by E-FILE.
The majority of Canadians who would rather have someone else deal with the intricacies of the Canadian tax system on their behalf can find information about E-FILE on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/efile-individuals.html. That site will also provide a listing (searchable by postal code) of authorized E-FILE service providers across Canada; the listing can be found at https://apps.cra-arc.gc.ca/ebci/efes/epcs/prot/ntr.action.
Those who are able and willing to prepare their own tax returns and file online can use the CRA’s NETFILE service (which will be available as of Monday, February 19, 2024, at 6 a.m. Eastern Time); information on that service can be found at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/menu-eng.html. While there are some kinds of returns which cannot be filed using NETFILE (for instance, a return for a non-resident of Canada, or for someone who declared bankruptcy in 2022 or 2023), the vast majority of Canadians who wish to do so will be able to NETFILE their return.
At one time, it was necessary to obtain and provide an access code in order to NETFILE. While such a code is no longer a requirement, the CRA has provided tax filers with a taxpayer-specific code which can be included with the return for 2023. That eight-character alpha-numeric code is found (in very small type) in the top right-hand corner of the first page of the 2023 Notice of Assessment, just under the “Date Issued” line for that Notice of Assessment. Including the code with your return is not mandatory; however, the taxpayer will be able to use information from the 2023 return when confirming their identity with the CRA only if the code was provided on that return.
A return can be filed using NETFILE only where it is prepared using tax return preparation software which has been approved by the CRA. While such software can be found for sale just about everywhere at this time of year, approved software which can be used free of charge, or for a nominal charge, is also available. A listing of free and commercial software products which are approved for use in preparing individual returns for 2023 is maintained on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html. That listing will be updated and added to once the NETFILE service for 2023 returns is open, and throughout the tax filing season.
The CRA will automatically send (by regular mail) a hard copy of the 2023 tax return package to anyone who paper-filed a return for 2022. However, for the first time this year, that tax return package will not include a line-by-line guide on how to complete the return. Taxpayers who wish to have a paper copy of that line-by-line guide sent to them by mail can order a copy of the guide (or of the entire tax return package of forms and guide) on the CRA website at https://apps.cra-arc.gc.ca/ebci/cjcf/fpos-scfp/pub/rdr?searchKey=ncp%20. Finally, taxpayers can download and print a hard copy of the return and guide from the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html.
A minority of taxpayers will have the option of filing their returns using a touch-tone telephone. That option, called SimpleFile by Phone (which until this year was called “File my Return”), will be available to eligible lower-income Canadians whose returns are relatively simple and whose tax situation remains relatively unchanged from year to year. For such taxpayers, it is important to file, even if there is no income to report, so that they receive the benefits and credits to which they are entitled. This automated telephone filing option is, however, available only to taxpayers who are advised by the CRA of their eligibility for the SimpleFile by Phone service; emails and letters advising those individuals of their eligibility are being sent out by the CRA in February 2024. Information on SimpleFile by Phone can be found on the CRA website at SimpleFile by Phone automated phone service - Canada.ca.
Finally, taxpayers who are not comfortable preparing their own returns, but for whom the cost of engaging a third party to do so is a financial hardship, have another option. During tax filing season, there are a number of community tax clinics staffed by volunteers at which taxpayers can have their returns prepared free of charge. A searchable listing of the available clinics (which is updated regularly throughout the filing season) and their method of operation (walk-in, appointment, virtual, etc.) this tax season can be found on the CRA website at https://www.canada.ca/en/revenue-agency/campaigns/free-tax-help.html.
While there are a number of filing options available to Canadian taxpayers, there’s no element of choice when it comes to the filing and payment deadlines for tax returns for 2023. The deadline for payment of any balance of taxes owed for 2023 is Tuesday April 30, 2024. There are no exceptions to this deadline and, absent very unusual circumstances, no extensions are possible.
For the majority of Canadians, the tax return for 2023 must also be filed on or before Tuesday, April 30, 2024. Self-employed taxpayers and their spouses, however, have until Monday, June 17, 2024 to file their returns for 2023. (While the filing deadline for self-employed taxpayers and their spouses is normally June 15, this year that date falls on a Saturday and so the filing deadline for self-employed taxpayers and their spouses is extended to Monday June 17, 2024.) It’s important to note that, regardless of the applicable tax return filing deadline, all Canadian individual taxpayers must pay any balance of tax owed for the 2023 tax year on or before Tuesday April 30, 2024.
A summary of filing and payment due dates for returns for the 2023 tax year can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/important-dates-individuals.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Income tax is a big-ticket item for most retired Canadians. Especially for those who are no longer paying a mortgage, the annual tax bill may be the single biggest expenditure they are required to make each year. Fortunately, the Canadian tax system provides a number of tax deductions and credits available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit), in order to help minimize that tax burden. And in most cases, the availability of those credits is flagged, either on the income tax form which must be completed each spring or on the accompanying income tax guide.
Income tax is a big-ticket item for most retired Canadians. Especially for those who are no longer paying a mortgage, the annual tax bill may be the single biggest expenditure they are required to make each year. Fortunately, the Canadian tax system provides a number of tax deductions and credits available only to those over the age of 65 (like the age credit) or only to those receiving the kinds of income usually received by retirees (like the pension income credit), in order to help minimize that tax burden. And in most cases, the availability of those credits is flagged, either on the income tax form which must be completed each spring or on the accompanying income tax guide.
There is, however, another income-tax-saving strategy which is not nearly as well known. Even more unfortunate is the fact that the benefits of that strategy (and the ease with which it can be accomplished) aren’t readily apparent from either the tax return form or the annual income tax guide. That tax saving strategy is pension income splitting and it’s likely the case that many taxpayers who could benefit aren’t familiar with the strategy, especially if they are not receiving professional tax planning or tax return preparation advice.
That’s a particularly unfortunate reality because pension income splitting has the potential to generate more tax savings among taxpayers over the age of 65 (and certainly those over the age of 71, for whom RRSP contributions are no longer possible) than just about any other tax planning strategy available to retirees. In addition, it’s one of the very few tax planning strategies which requires no expenditure of funds on the part of the taxpayer and which can be implemented after the end of the tax year, at the time the return for that tax year is filed.
When described in those terms, pension income splitting can sound like one of those “too good to be true” tax scams, but that’s not the case. Essentially, what pension income splitting offers is a government-sanctioned opportunity for Canadian residents who are married (and, usually, where the spouse whose income is being split is aged 65 or older) to make a notional (meaning that no money actually has to change hands) reallocation of private pension income between them on their annual tax returns, and to benefit from a lower overall family tax bill as a result.
Pension income splitting, like all forms of income splitting, works because Canada has what is called a “progressive” tax system, in which the applicable tax rate goes up as income rises. For 2023, the federal tax rate applied to about the first $53,000 of taxable income is 15%, while the federal rate applied to approximately the next $53,000 of such income is 20.5%. So, an individual who has $106,000 in taxable income would pay federal tax of about $18,815. If that $106,000 was divided equally between such individual and his or her spouse, each would have $53,000 in taxable income and federal tax payable of $7,950 each. The total federal family tax bill would be $15,900, for a federal tax saving of just under $3,000.
The general rule with respect to pension income splitting is that a taxpayer who receives private pension income during the year is entitled to allocate up to half that income (without any dollar limit) to his or her spouse for tax purposes. In this context, private pension income means a pension received from a former employer and, where the income recipient is age 65 or older, payments from an annuity, a registered retirement savings plan (RRSP), or a registered retirement income fund (RRIF). Government source pensions, like the Canada Pension Plan (CPP), Québec Pension Plan (QPP), or Old Age Security (OAS) payments do not qualify for pension income splitting, regardless of the age of the recipient.
The mechanics of pension income splitting are relatively simple. There is no need to transfer funds between spouses or to make any change in the actual payment or receipt of qualifying pension amounts, and no need to notify a pension administrator. Taxpayers who wish to split eligible pension income received by either of them must each file Form T1032, Joint Election to Split Pension Income (T1032 E (23)), with their annual tax return. That form, which is not included in the annual tax return package, can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1032.html or can be ordered in large print format by calling 1-800-959 8281.
On the T1032, the taxpayer receiving the private pension income and the spouse with whom that income is to be split must make a joint election to be filed with their respective tax returns for 2023. Since the splitting of pension income affects the income and therefore the tax liability of both spouses, the election must be made and the form filed by both spouses – an election filed by only one spouse or the other won’t suffice. In addition to filing the T1032, the spouse who is the actual recipient of the pension income to be split must deduct from income the amount of eligible pension income which is being allocated to their spouse. That deduction is taken on Line 21000 of the 2023 return. And, conversely, the spouse to whom the eligible pension income is being allocated is required to add that amount to their income on the return, this time on Line 11600. Essentially, to benefit from pension income splitting, all that’s needed is for each spouse to file a single form with the CRA and to make a single entry on their 2023 tax return.
By the end of February or early March, taxpayers will have received (or downloaded) the information slips which summarize the income received from various sources during 2023. At that time, couples who might benefit from this strategy can review those information slips and calculate the extent to which they can make a dent in their overall tax bill for the year through a little judicious pension income splitting.
Those wishing to obtain more information on pension income splitting than is available in the 2023 General Income Tax and Benefit Guide should refer to the CRA website at http://www.cra-arc.gc.ca/pensionsplitting/, where more detailed information is available.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
If there is one invariable “rule” of financial and retirement planning of which most Canadians are aware, it is the unquestioned wisdom of making regular contributions to one’s registered retirement savings plan (RRSP). And it is true that for several decades the RRSP was the only tax-sheltered savings and investment vehicle available to most individual Canadians.
If there is one invariable “rule” of financial and retirement planning of which most Canadians are aware, it is the unquestioned wisdom of making regular contributions to one’s registered retirement savings plan (RRSP). And it is true that for several decades the RRSP was the only tax-sheltered savings and investment vehicle available to most individual Canadians.
In 2009, however, that reality changed with the introduction of Tax-Free Savings Accounts (TFSAs). In 2023, yet another variable was added to that decision-making process with the introduction of the First Home Savings Account (FHSA), which provides Canadians with the ability to save toward the purchase of a home on a tax-assisted basis.
It should be said that there’s nothing wrong, and a lot right, with making the maximum allowable contribution to each of a TFSA, an RRSP, and an FHSA annually. However, doing all that assumes the availability of a level of discretionary income that just isn’t the financial reality in which most Canadians live and plan. In addition, there are circumstances in which making a contribution to one type of plan or the other is clearly the better choice – and sometimes the only choice. Some of those circumstances are as follows.
- For Canadians over the age of 71, there is no real choice. All individual Canadians must collapse their RRSPs by the end of the year in which they turn 71, and no RRSP contributions can be made after that time. Practically speaking, a TFSA is the only tax-sheltered savings vehicle to which taxpayers over age 71 can contribute. (While contributions to an FHSA can be made by taxpayers of any age, an FHSA is of benefit to individuals who are planning for the purchase of a home – not a fact situation which applies to most Canadians over the age of 71). Many taxpayers over the age of 71, however, have transferred their RRSP savings to a registered retirement income fund (RRIF) and are required to withdraw a specified percentage of funds from that RRIF each year. For taxpayers who are in the fortunate position of having such income in excess of current cash flow needs, that excess can be contributed to a TFSA. While the RRIF withdrawals must still be included in income and taxed in the year of withdrawal, transferring the funds to a TFSA will allow them to continue compounding free of tax and no additional tax will be payable when and if the funds are withdrawn. And, unlike RRIF or RRSP withdrawals, monies withdrawn in the future from a TFSA will not affect the planholder’s eligibility for Old Age Security benefits or for the federal age credit.
- The minority of working taxpayers who are members of registered pension plans (RPPs) will also likely find savings through a TFSA or FHSA the better or even the only option. The maximum amount which can be contributed to an RRSP in a given year is generally 18% of the previous year’s income, to a specified dollar amount ceiling. However, any allowable contribution is reduced, for members of RPPs, by the amount of benefits accrued during the year under their pension plan. Where the RPP is a particularly generous one, RRSP contribution room may be minimal, or even non-existent, and a TFSA or FHSA contribution the logical alternative.
- Where savings are being put aside for an expenditure that is likely to be made in the next five years (like a new car or a wedding), and that savings goal is something other than home ownership, saving through a TFSA is almost certain to be the better option. Taxpayers in that situation are sometimes tempted to make an RRSP contribution instead, in order to get a tax refund, and then to withdraw the funds when the planned expenditure is to be made. However, while choosing that option will provide a deduction on this year’s return and probably generate a tax refund, tax will still have to be paid when the funds are withdrawn from the RRSP a year or two later. And, more significantly from a long-term point of view, using an RRSP in this way will eventually erode one’s ability to save for retirement, as RRSP contributions which are withdrawn from the plan cannot be replaced. While the amounts involved may seem small, the loss of compounding on even a relatively small amount over 25 or 30 years can make a significant dent in one’s ability to save for retirement.
The greatest tax benefit of contributing to an RRSP is realized when contributions are made when income (and therefore tax payable) is high, and the intention is to withdraw those funds when both income and the rate of tax payable on that income are lower. Where that’s not the case, saving through a TFSA can make more sense, as in the following situations.
- Taxpayers who are expecting their income to rise significantly within a few years – for example students in post-secondary or professional education or training programs – can save some tax by contributing to a TFSA while they are in school and their income (and therefore their tax rate) is low, allowing the funds to compound on a tax-free basis, and then withdrawing the funds tax-free once they’re working, when their tax rate will be higher. At that time, the withdrawn funds can be used to make an RRSP contribution, which will be deducted against income which would be taxed at the much higher rate, generating a tax savings. And, if a need for funds should arise in the meantime, a tax-free TFSA withdrawal can always be made.
- Lower-income taxpayers, for whom there isn’t likely to be a great difference between pre- and post-retirement income, are likely better off saving through a TFSA. That’s especially the case where those taxpayers may be eligible in retirement for means-tested government benefits like the Guaranteed Income Supplement or tax credits like the GST/HST credit or age credit. Withdrawals made from an RRSP or RRIF during retirement will be included in income for purposes of determining eligibility for such benefits or credits, and lower-income taxpayers could find that such withdrawals have pushed their income to a level which reduces or eliminates their eligibility. On the other hand, monies withdrawn from a TFSA are not included in income for the purpose of determining eligibility for any government benefits or tax credits, so saving through a TFSA will ensure that receipt of such benefits is not put at risk.
- For taxpayers who are saving toward the purchase of a first home, the FHSA is clearly the best choice. Contributions made to an FHSA are deductible from income, investment income of any kind earned by contributed funds are not taxed as earned, and where original contributions and investment gains are withdrawn, no tax is payable where the amounts withdrawn are used to purchase a first home. The result is a permanent tax savings that can’t be achieved through contributing to either an RRSP or a TFSA.
Taxpayers who are contemplating making a contribution to any of these tax-assisted plans must also keep in mind that each type of plan has its own contribution deadline. A contribution to a TFSA can be made at any time of the year. Contributions to an RRSP must, in order to be deducted on the return for 2023, be made on or before Thursday, February 29, 2024. And, finally, contributions to an FHSA must be made by the end of the calendar year in order to be claimed as a tax deduction on the return for that year. In other words, in order to deduct a contribution made to an FHSA on the return for the 2023 tax year, that contribution must have been made on or before December 31, 2023. Any FHSA contribution made now would be deductible on the return for 2024.
As is the case with most tax and financial planning questions, there isn’t a universal right or wrong answer when it comes to decisions on contributing to a TFSA and/or an RRSP and/or an FHSA. What is certain, however, is that the best choice for any individual is the one which takes account of their particular tax and financial realities and prospects – both current and future.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Sometime during the month of February, millions of Canadians will receive some unexpected mail from the Canada Revenue Agency (CRA). That mail, entitled simply “Instalment Reminder”, will set out the amount of instalment payments of income tax to be paid by the recipient taxpayer by March 15 and June 15 of this year.
Sometime during the month of February, millions of Canadians will receive some unexpected mail from the Canada Revenue Agency (CRA). That mail, entitled simply “Instalment Reminder”, will set out the amount of instalment payments of income tax to be paid by the recipient taxpayer by March 15 and June 15 of this year.
Receiving an “Instalment Reminder” from the CRA won’t be a surprise for some recipients who have paid tax by instalments during previous tax years. For others, however, the need to make tax payments by instalment is a new, unfamilar (and probably unwelcome) concept. That’s because for most Canadians – certainly those Canadians who earn their income through employment – the payment of income tax throughout the year is an automatic and largely invisible process, requiring no particular action on the part of the employee/taxpayer. Federal and provincial income taxes, together with Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, are deducted from each employee’s income, and the amount deposited to an employee’s bank account is the net amount remaining after such taxes, contributions, and premiums are deducted and remitted on the employee’s behalf to the CRA. While no one likes having to pay taxes, having those taxes paid “off the top” in such an automatic way is, relatively speaking, painless. Such is not, however, the case for the sizeable minority of Canadians who pay their income taxes by way of tax instalments.
The CRA’s decision to send an Instalment Reminder to certain taxpayers isn’t an arbitrary one. Rather, an Instalment Reminder is generated when sufficient income tax has not been deducted from payments made to that taxpayer throughout the year. Put more technically, an instalment reminder will be issued by the CRA where the amount of tax which was or will be owed when filing the annual tax return is more than $3,000 in the current (2024) tax year and either of the two previous (2022 or 2023) tax years. Essentially, the requirement to pay by instalments will be triggered where the amount of tax withheld from the taxpayer’s income throughout the year is at least $3,000 less than their total tax owed for 2024 and either 2022 or 2023. For residents of Québec, that threshold amount is $1,800.
Such obligation arises on a regular basis for those who are self-employed, of course, and generally for those whose income is largely derived from investments. The group of recipients of a tax instalment reminder often also includes retired Canadians, especially the newly retired, for two reasons. First, while employees most often have income from only a single source – their paycheque – retirees often have multiple sources of income, including Canada Pension Plan (CPP) and Old Age Security (OAS) payments, private retirement savings, and, sometimes, employer-provided pensions. And, while income tax is deducted automatically from one’s paycheque, that’s not the case for most sources of retirement income. Relatively few new retirees realize that it’s necessary to make arrangements to have tax deducted “at source” from either their government source income (like CPP or OAS payments) or private retirement income (like pensions or registered retirement income fund (RRIF) withdrawals), and to make sure that the total amount of those deductions is sufficient to pay the total tax bill for the year. It is that group of individuals who may be surprised and puzzled by the arrival of an unfamiliar “Instalment Reminder” from the CRA. However, no matter what kind of income a taxpayer has received, or why sufficient tax has not been deducted at source, the options open to a taxpayer who receives such an Instalment Reminder are the same.
First, the taxpayer can pay the amounts specified on the Reminder, by the March and June payment due dates. Choosing this option will mean that the taxpayer will not face any interest or penalty charges, even if the amount paid by instalments throughout the year turns out to be less than the taxes actually payable for 2024. If the total of instalment payments made during 2024 turn out to be more than the taxpayer’s total tax liability for the year, he or she will of course receive a refund when the annual tax return is filed in the spring of 2025.
Second, the taxpayer can make instalment payments based on the amount of tax which was payable for the 2023 tax year (which will, of course, be known once the return for 2023 is completed). Where a taxpayer’s income has not changed significantly between 2023 and 2024 and their available deductions and credits remain the same, the likelihood is that total tax liability for 2024 will be slightly less than it was in 2023, as the result of the indexation of both tax credit amounts and income tax brackets.
Third, the taxpayer can estimate the amount of tax which they will owe for 2024 and can pay instalments based on that estimate. Where a taxpayer’s income will decrease significantly from 2023 to 2024, such that the tax bill will also be substantially reduced (as might be the case for someone for whom 2024 is their first year of retirement), this option can make the most sense.
A taxpayer who elects to follow the second or third options outlined above will not face any interest or penalty charges if there is no additional tax payable when the return for the 2024 tax year is filed in the spring of 2025. However, should instalments paid have been late or insufficient, the CRA will impose interest charges, at rates which are higher than current commercial rates. (The rate charged for the first quarter of 2024 – until March 31, 2024 – is 10%.) As well, where interest charges are levied, such interest is compounded daily, meaning that on each successive day, interest is levied on the previous day’s interest. It’s also possible for the CRA to levy penalties for overdue or insufficient instalments, but that is done only where the amount of instalment interest charged for the year is more than $1,000.
Most Canadian taxpayers are understandably disinclined to pay their taxes any sooner than absolutely necessary. However, ignoring an Instalment Reminder is never in the taxpayer’s best interests. Those who don’t wish to involve themselves in the intricacies of tax calculations can simply pay the amounts specified in the Reminder. The more technical-minded (or those who want to ensure that they are paying no more than absolutely required, and are willing to take the risk of having to pay interest on any shortfall) can avail themselves of the second or third options outlined above.
Detailed information on the instalment payment system for 2024, and the calculation and payment options available to taxpayers, can be found on the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/income-tax-instalments.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The Employment Insurance (EI) premium rate for 2024 is set at 1.66%.
The Employment Insurance (EI) premium rate for 2024 is set at 1.66%.
Yearly maximum insurable earnings are set at $63,200, making the maximum employee premium $1,049.12.
As in previous years, employer premiums are 1.4 times the employee premium. The maximum employer premium for 2024 is therefore $1,468.77.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Changes made to the Québec Pension Plan (QPP) beginning in the 2024 calendar year will create a two-tier contribution structure.
Changes made to the Québec Pension Plan (QPP) beginning in the 2024 calendar year will create a two-tier contribution structure.
First-tier contributions for 2024 are set at 6.4% of pensionable earnings between $3,500 and $68,500.
Second-tier contributions for 2024 are set at 4.0% of pensionable earnings between $68,500 and $73,200.
The maximum QPP contribution in 2024 for individuals making only first-tier contributions (those with pensionable earnings of $68,500 or less) will be $4,160. Individuals making second tier contributions will be required to contribute up to an additional $188.00 in contributions for the year.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Changes made to the Canada Pension Plan (CPP) beginning in the 2024 calendar year will create a two-tier contribution structure.
Changes made to the Canada Pension Plan (CPP) beginning in the 2024 calendar year will create a two-tier contribution structure.
First-tier contributions for 2024 are set at 5.95% of pensionable earnings between $3,500 and $68,500.
Second-tier contributions for 2024 are set at 4.0% of pensionable earnings between $68,500 and $73,200.
The maximum CPP contribution in 2024 for individuals making only first-tier contributions (those with pensionable earnings of $68,500 or less) will be $3,867.50. Individuals making second tier contributions will be required to contribute up to an additional $188.00 in contributions for the year.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Dollar amounts on which individual non-refundable federal tax credits for 2024 are based, and the actual tax credit claimable, will be as follows:
Dollar amounts on which individual non-refundable federal tax credits for 2024 are based, and the actual tax credit claimable, will be as follows:
Credit amount Tax credit
Basic personal amount* $15,705 $2,356
Spouse or common law partner amount* $15,705 $2,356
Eligible dependant amount* $15,705 $2,356
Age amount $8,790 $1,319
Net income threshold for erosion of age credit $44,325
Canada employment amount $1,433 $215
Disability amount $9,872 $1,481
Adoption expenses credit $19,066 $2,860
Medical expense tax credit income threshold amount $2,759
*For taxpayers having net income for the year of more than $173,205, amounts claimable for the basic personal amount, the spousal amount and the eligible dependant amount for 2024 may differ.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The indexing factor for federal tax credits and brackets for 2024 is 4.7%. The following federal tax rates and brackets will be in effect for individuals for the 2024 tax year.
The indexing factor for federal tax credits and brackets for 2024 is 4.7%. The following federal tax rates and brackets will be in effect for individuals for the 2024 tax year.
Income level Federal tax rate
$15,705 - $55,867 15.0%
$55,868 - $111,733 20.5%
$111,734 - $173,205 26.0%
$173,206 - $246,752 29.0%
Over $246,752 33.0%
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Each new tax year brings with it a schedule of tax payment and filing deadlines, as well as some changes with respect to tax saving and planning opportunities. Some of the more significant dates and changes for individual taxpayers for 2024 are listed below.
Each new tax year brings with it a schedule of tax payment and filing deadlines, as well as some changes with respect to tax saving and planning opportunities. Some of the more significant dates and changes for individual taxpayers for 2024 are listed below.
Registered Retirement Savings Plan (RRSP) deduction limit and contribution deadline
The RRSP current year contribution limit for the 2023 tax year is $30,780. In order to make the maximum current year contribution for 2023 (for which the contribution deadline will be Thursday February 29, 2024), it will be necessary to have earned income of $171,000 for the 2022 taxation year.
Tax-Free Savings Account (TFSA) contribution limit
The TFSA contribution limit for 2024 is increased to $7,000. The actual amount which can be contributed by a particular individual includes both the current year limit and any carryover of uncontributed or re-contribution amounts from previous taxation years.
Taxpayers can find out their personal 2024 TFSA contribution limit by calling the Canada Revenue Agency’s Individual Income Tax Enquiries line at 1-800-959-8281. Those who have registered for the CRA’s online tax service My Account can obtain that information by logging into My Account.
A TFSA contribution can be made at any time during the taxation year.
First Home Savings Account (FHSA) contribution limit for 2024
The FHSA current year contribution limit for 2024 is $8,000. The actual amount which can be contributed by a particular individual includes both the current year contribution limit and any carryover of uncontributed amounts from 2023.
There is a lifetime per individual limit of $40,000 in contributions to an FHSA, and an FHSA contribution can be made at any time during the taxation year.
Individual tax instalment deadlines for 2024
Millions of individual taxpayers pay income tax by quarterly instalments, which are due on the 15th day of March, June, September, and December 2024. Where the 15th of the month falls on a weekend or a statutory holiday, the instalment payment deadline is extended to the next business day.
The actual tax instalment due dates for 2024 are as follows:
- Friday March 15, 2024
- Monday June 17, 2024
- Monday September 16, 2024
- Monday December 16, 2024
Old Age Security income clawback threshold
For 2024, the income level above which Old Age Security (OAS) benefits are clawed back is $90,997.
Individual tax filing and payment deadlines in 2024
For all individual taxpayers, including those who are self-employed, the deadline for payment of any balance of 2023 taxes owed is Tuesday April 30, 2024.
Taxpayers (other than the self-employed and their spouses) must file an income tax return for 2023 on or before Tuesday April 30, 2024.
Self-employed taxpayers and their spouses must file an income tax return for 2023 on or before Monday June 17, 2024.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
While most taxpayers pay their annual income tax bill in full and by the tax payment deadline of April 30, there are many circumstances that could result in an individual’s being unable to meet their tax payment obligations in full or on time. Individuals who earn income from employment pay their taxes through deductions from their paycheques, but can still be faced with a tax balance owing when the annual return is filed. Newly retired Canadians who are receiving income from a variety of sources may not realize that sufficient tax is not being withheld from all of those sources to cover the tax bill for the year. And, in a time when many Canadians and their families are living paycheque to paycheque, most taxpayers are unlikely to have additional funds readily available to pay a large, unexpected tax bill.
While most taxpayers pay their annual income tax bill in full and by the tax payment deadline of April 30, there are many circumstances that could result in an individual’s being unable to meet their tax payment obligations in full or on time. Individuals who earn income from employment pay their taxes through deductions from their paycheques, but can still be faced with a tax balance owing when the annual return is filed. Newly retired Canadians who are receiving income from a variety of sources may not realize that sufficient tax is not being withheld from all of those sources to cover the tax bill for the year. And, in a time when many Canadians and their families are living paycheque to paycheque, most taxpayers are unlikely to have additional funds readily available to pay a large, unexpected tax bill.
While falling behind on any financial obligation isn’t good, tax debt is a particularly bad kind of debt to have, for a couple of reasons. First, interest is charged by the Canada Revenue Agency on all outstanding tax amounts owed. Interest rates are already at their highest level in more than 20 years – and the CRA charges interest at higher than market rates. By law, the interest rate levied by the CRA is two percentage points higher than commercial interest rates. The CRA’s “prescribed” interest rate – the one charged on all tax amounts owed – is currently (from October 1 to December 31, 2023) set at 9.0%. Beginning on January 1, 2024 and until March 31, 2024, that rate will increase to 10.0%. Second, all interest amounts charged by the CRA are compounded daily, meaning that on each successive day, interest is charged on interest amounts which were levied the day before. It’s not at all hard to see how, where interest is charged at 10% and compounded daily, total interest charges could accumulate very, very quickly.
Where a taxpayer owes money to the CRA and hasn’t the funds to pay that amount in full, there are a couple of options. The first is to reach out to the CRA to set up a payment arrangement. Like all creditors, the CRA prefers to be paid on time and in full. Especially in difficult economic times, that’s not always possible and the CRA is generally willing to consider an arrangement in which the tax debt is repaid over time.
There are two avenues available to taxpayers who want to propose a payment arrangement with the CRA. The first is a call to the Agency’s automated TeleArrangement service at 1-866-256-1147. When making such a call, it is necessary for the taxpayer to provide their social insurance number, date of birth, and the amount entered on line 15000 of the last tax return for which the taxpayer received a Notice of Assessment. For taxpayers who are up to date on their tax filings, that will be the Notice of Assessment for the return for the 2022 tax year. The TeleArrangement Service is available Monday to Friday, from 7 a.m. to 10 p.m., Eastern time.
Taxpayers who would rather speak directly to a CRA employee can call the Agency’s debt management call centre at 1-888-863-8657 Monday to Friday between 7 a.m. and 8 p.m. Eastern time, or can complete an online form (available at https://apps.cra-arc.gc.ca/ebci/iesl/showClickToTalkForm.action) requesting a callback from a CRA agent.
Where tax amounts are owed, it’s necessary to come to some arrangement with the CRA to eliminate that debt, as there is no ability to have tax amounts owed forgiven. That’s not the case, however, with respect to interest amounts which have accrued on the tax debt. In some circumstances, the CRA is prepared to waive such interest charges, along with any penalty amounts that have been assessed. It does so under the Taxpayer Relief Program.
Interest and penalty relief under the Taxpayer Relief Program is often provided to taxpayers who have been unable to meet their tax payment obligations as the result of natural disasters or other circumstances outside of their control. However, such relief is also available to taxpayers who are unable to meet such obligations owing to financial hardship. In particular, the CRA website indicates that it would consider providing interest relief where financial hardship and an inability to pay results from loss of work, or paying the interest would make it difficult to provide basic necessities such as food, medical help, transportation, or shelter.
In order to receive relief from interest charges, a taxpayer must provide the CRA with detailed information on their current financial situation. That financial situation is outlined on a prescribed CRA form, which is available at Form RC376, Taxpayer Relief Request – Statement of Income and Expenses and Assets and Liabilities for Individuals. In addition to the information submitted on that form, the taxpayer must also provide supporting documentation, such as current mortgage statement(s), property assessment(s), rental agreement(s), loans and recurring bills, bank and credit card statements for the most recent three months, and current investment statements.
The CRA will review the information submitted and make a determination of whether to cancel interest amounts owed, in whole or in part, in order to allow the taxpayer to pay off their tax debt. The CRA’s goal is to make a decision on straightforward applications made under the Taxpayer Relief Program within six months (180 days) after the application is received. However, not surprisingly, the Agency is currently receiving a higher than usual number of applications, meaning that the timeline for making decisions on those applications is now closer to eight months (or longer, for complex applications).
In considering whether to grant an application for interest and penalty relief under the Program, the Agency will consider a number of factors, including the taxpayer’s tax return filing and payment history, whether the taxpayer knowingly let a balance owing exist, which resulted in additional interest, whether reasonable care was taken in the management of the taxpayer’s tax affairs, and finally, whether the taxpayer acted quickly to correct any delay or omission.
Where the taxpayer’s request is denied, they can make on online request to have the decision reviewed. If that decision is also negative, the only recourse is to ask a judge to review the CRA’s decision. In the great majority of cases, however, the cost of taking that step is likely to be greater than the amount of interest and penalties at issue.
In all cases, the best course of action for the taxpayer is to be proactive – to contact the CRA as soon as the taxpayer is aware that full payment of taxes owed will not be possible, to set up a payment arrangement, and to make an application under the Taxpayer Relief Program for waiver of any interest or penalty charges. Taking the initiative and moving quickly to resolve the problem will both minimize the amount of interest which will accrue on unpaid taxes and will count in the taxpayer’s favour when the CRA considers whether to allow an application for waiver of those interest charges.
Detailed information on the Taxpayer Forgiveness Program is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/taxpayer-relief-provisions.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
While almost everyone looks forward to retirement and an end to the day-to-day demands of working life, there’s also no question but that the decision to give up a regular paycheque is a stressful one. Particularly when the cost of life’s necessities – groceries, rent, mortgage interest payments – seems to be continually increasing, individuals wanting to retire have to wonder whether they can actually afford to do so, or whether it would be foolhardy, in the current economic realities, to walk away from a reliable, regular paycheque.
While almost everyone looks forward to retirement and an end to the day-to-day demands of working life, there’s also no question but that the decision to give up a regular paycheque is a stressful one. Particularly when the cost of life’s necessities – groceries, rent, mortgage interest payments – seems to be continually increasing, individuals wanting to retire have to wonder whether they can actually afford to do so, or whether it would be foolhardy, in the current economic realities, to walk away from a reliable, regular paycheque.
The first financial task faced by anyone contemplating retirement in the very near future is to determine what financial resources they will have to live on, and whether those resources are sufficient. And, while no one can accurately predict where inflation or interest rates are going, it is nonetheless possible to formulate “best case” and “worst case” scenarios, and to test one’s retirement income expectations against both.
For most Canadians, income in retirement will come from three sources. The first two sources – a Canada Pension Plan (CPP) retirement benefit and Old Age Security (OAS) payments – will be received by nearly all retirees. The fortunate minority who are members of an employer-sponsored registered pension plan will also receive a monthly benefit from that plan. For the majority of Canadian retirees who will not receive a pension from their employer, the balance of their income in retirement (after CPP and OAS) will come from private retirement savings accumulated in registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), and tax-free savings accounts (TFSAs). The real question for most Canadians is how to determine the amount of annual after-tax income which all those sources of income will generate during their retirement years, and that’s not a simple calculation.
Money can be withdrawn from an RRSP, an RRIF, or a TFSA at any age, a CPP retirement pension can start anytime from age 60 to age 70, and Old Age Security benefits can be received as early as age 65 or as late as age 70. For both CPP and OAS, benefits will rise with each month that receipt of such benefits is deferred. As well, income from the different types of retirement income may be subject to different tax treatment, meaning that the after-tax amount received on $100 of income may vary widely, depending on the nature and source of that income.
The number of factors to consider and, especially, the complexity which results from the interaction of those factors, could reasonably lead the average Canadian to conclude that it’s just not possible to make an accurate determination of the best way to structure their income in retirement in order to ensure a reasonable income throughout their retirement years. But help is at hand – and it’s free!
That help is in the form of two online retirement planners which are available on the Government of Canada website. The first of those is a new “Retirement Hub” webpage which can be found at Learn and plan for your retirement – Retirement Hub – Canada.ca. While the Retirement Hub does include financial calculations, it goes beyond finances to provide more broad-based information on transitioning to and living in retirement.
For purely financial calculations, the federal government provides a Retirement Income Calculator. That Calculator is included in the Retirement Hub webpage, but can also be found in a stand-alone version at https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html.
Using the Retirement Income Calculator, individual Canadian taxpayers can enter their personal data, including their date of birth, gender, and planned age of retirement, without the need to provide any personal identifying information. The user is then asked to provide information on income amounts which will be received from various sources, including any employer pension and Canada Pension Plan amounts and the age at which the user plans to begin receiving such income. Information is requested on the user’s period of residency in Canada, in order to determine whether he or she will be eligible to receive Old Age Security benefits and the amount of OAS benefits which will be provided at different ages. The calculator also allows the user to input the total amount of savings accumulated to date. Finally, information is requested on any other sources of income which will be available during retirement.
Using that data, the calculator estimates the amount of income which will be available to the individual from each source during each year of his or her retirement and generates a bar graph and a table showing those income amounts.
The real benefit of the calculator, however, lies in the individual’s ability to vary the inputs – to create “what-if” scenarios in order to determine the effect any changes made will have on retirement income at various ages. Users can change the age at which they choose to receive government-sponsored retirement benefits like CPP and OAS, or can specify a different rate of return (pre- or post-retirement) earned on retirement savings. They can also change the period of time (i.e., life expectancy) over which retirement income will be spread. That way, the user can obtain answers to frequently asked questions like the following:
- How much more will I receive if I accelerate – or delay – receipt of Canada Pension Plan or Old Age Security benefits, or both, for one, two, or more years?
- What if I work an additional year or two after age 65 before starting RRSP withdrawals?
- What if I earn income from part-time employment during retirement?
- What if I choose to begin receiving CPP and OAS as soon as I am eligible, but defer making RRSP withdrawals?
- What if I live longer than the average life expectancy?
For each of these what-if fact scenarios, the calculator will determine the effect that particular change will have on the amount of income receivable from each different retirement income source, and will provide a summary of income for each year of retirement from all such sources under each fact scenario created by the user.
There are, of course, some factors which can’t be incorporated into any calculator because they cannot be predicted or planned for. No one can predict how long their retirement will last (although the Calculator does project retirement income based on average life expectancy for individuals of the age and gender of the user). Similarly, it’s never possible to know what investment returns will be earned on retirement savings during retirement, or what the rate of inflation will be. The calculator’s ability to estimate future income data based on a number of different fact patterns does, however, allow users to create retirement income projections under both “best-case” and “worst-case” retirement income scenarios. And, based on those income projections, an individual can determine whether retirement in the near future is financially feasible.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
During the month of December, it’s customary for employers to provide something “extra” for their employees, whether it’s a compensation bonus, a gift, or an employer-sponsored social event – or all three. And, given the current labour shortages in many sectors, employers may be particularly motivated this year to provide such extras in order to retain current employees, or attract new ones. What employers definitely aren’t trying to do is create a tax headache or liability for their employees: unfortunately, it’s also the case that a failure to properly structure employee gifts or even employee social events can result in unintended and unwelcome tax consequences to those employees.
During the month of December, it’s customary for employers to provide something “extra” for their employees, whether it’s a compensation bonus, a gift, or an employer-sponsored social event – or all three. And, given the current labour shortages in many sectors, employers may be particularly motivated this year to provide such extras in order to retain current employees, or attract new ones. What employers definitely aren’t trying to do is create a tax headache or liability for their employees: unfortunately, it’s also the case that a failure to properly structure employee gifts or even employee social events can result in unintended and unwelcome tax consequences to those employees.
Trying to formulate and administer the tax rules around holiday gifts and celebrations is something of a no-win situation for the tax authorities. On an individual or even a company level, the amounts involved are usually small, or even nominal, and the range of situations which must be addressed by the related tax rules are virtually limitless. As a result, the cost of drafting and administering those rules can outweigh the revenue generated by the enforcement of such rules, to say nothing of the potential ill-will generated by imposing tax consequences on holiday gifts or parties. Nonetheless, the potential exists for employers to provide what would otherwise be taxable remuneration in the guise of holiday gifts, and it’s the responsibility of the Canada Revenue Agency to ensure that such situations don’t slip through the tax net.
The determination of whether employer gifts constitute a taxable benefit which must be reported on a T4 or T4A slip and on which tax must be paid is based on administrative policy formulated and followed by the Canada Revenue Agency (the Agency). In 2023, the starting point of that administrative policy is that any gift (cash or non-cash) received by an employee from his or her employer at any time of the year is considered to constitute such a taxable benefit, to be included in the employee’s income for that year.
The CRA does, however, make some administrative concessions in this area, allowing non-cash gifts (as defined by the Agency, and within a specified annual dollar limit) to be received tax-free by employees, as long as such gifts are given on significant dates or events, like religious holidays such as Christmas or Hanukkah, or on the occasion of a birthday, a marriage, or the birth of a child.
In sum, the Agency’s current administrative policy is simply that such non-cash gifts to an employee, regardless of the number of such gifts, will not be taxable if the total fair market value of all such gifts (including goods and services tax or harmonized sales tax) to that employee is $500 or less annually. The total value over $500 annually will be a taxable benefit to the employee and must be included on the employee’s T4 for the year, and on which income tax must be paid.
It’s important to remember the “non-cash” criterion imposed by the Agency, as the $500 per year administrative concession does not apply to what the Agency terms “cash or near-cash” gifts, and all such gifts are considered to be a taxable benefit and included in income for tax purposes, regardless of amount. For this purpose, the Agency considers both currency and cheques to be cash. As well, in situations in which an employee selects and purchases something, submits a receipt to the employer, and receives reimbursement for that purchase, that employee is considered to have received a cash gift in the amount of the purchase/reimbursement.
Other instances of gifts made to employees are not so clear cut, as even a gift or award which cannot be converted to cash can be considered by the Agency to be a near-cash gift. Drawing a firm line between cash/near-cash gifts and non-cash gifts can be difficult, and the CRA provides the following information to help clarify that difference.
Examples of a near-cash gift or award
- Something easily converted to cash, such as bonds, securities or precious metals;
- Gift cards (with the exception outlined below);
- A prepaid card issued by a financial institution that can be used to pay for purchases; and
- Digital currency which is electronic money (i.e., cryptocurrencies not issued by a government or central bank).
At one time, the Agency considered all gift cards to be near-cash gifts and fully taxable to the employee who received one, but in 2022 the Agency carved out an exception to that policy. Specifically, effective for 2022 and subsequent tax years, a gift card that meets all of the following criteria will be treated as a non-cash gift, and subject to the usual rules governing non-cash gifts:
- the card comes with money already on it and can only be used to purchase goods or services from a single retailer or group of retailers identified on the card;
- the terms and conditions of the gift card clearly state that amounts on the card cannot be converted into cash; and
- the employer keeps a log to record details of the gift card information including the date, the employee’s name, and the reason for providing the gift card, as well as the name of the retailer and the type and amount of the gift card.
It may seem nearly impossible to plan for employee holiday gifts without running afoul of one or more of the detailed rules and administrative policies surrounding the taxation of such gifts and benefits. However, designing a tax-effective plan is possible, if the following rules are kept in mind.
- Cash or near-cash gifts should be avoided, as they will, no matter how large or small the amount, almost always create a taxable benefit to the employee. The sole exception to that rule is the exception carved out by the Agency which now treats gift certificates as non-cash gifts, but only where such gift certificates meet the criteria listed above.
- Where non-cash holiday gifts are provided to employees, gifts with a value of up to $500 can be received free of tax. The employer must be mindful of the fact that the $500 limit is a per-year and not a per-occasion limit. Where the employee receives non-cash gifts with a total value of more than $500 in any one taxation year, the portion over $500 is a taxable benefit to the employee.
The tax treatment of employer-sponsored holiday social events comes with its own set of rules, which have been subject to frequent change by the Agency. During the pandemic, it was necessary to formulate rules which would address the tax treatment of holiday events which were held virtually. While holiday gatherings in 2023 are now far more likely to be in-person gatherings, the administrative policies formulated during the pandemic nonetheless remain in place.
For 2023, the general rule is that a holiday social event (whether in-person or a combination of in-person and virtual) does not create a taxable benefit to employees where the event is open to all employees and the per person cost of the event is below a specified threshold. Specifically, such an event will not create a taxable benefit for employees if the per person (including spouses and common-law partners) cost is less than $150. Ancillary costs such as transportation home, taxi fare, and overnight accommodation for attendees are not included in the total cost limit for the event. As well, where gift cards are provided to employees who are attending “virtually”, such gift cards must meet the criteria listed above which allows the characterization of such gift cards as a non-cash gift.
It’s important for employers to remember that, where the per employee dollar limit outlined above is exceeded, the entire per employee cost of the event (including ancillary costs and the cost of attendance by a spouse or common-law partner) is treated as a taxable benefit to the employee – not just the amount by which those total costs exceed the prescribed $150 limit. And, finally, in order to benefit from that prescribed limit, employers are restricted to holding six or fewer employer-paid social events each year.
The range and variety of social events and employee gifts which can be provided by an employer to its employees is almost limitless, and where the government seeks to draft rules to govern the tax treatment of such a range of possibilities, complexity is inevitable. The best advice to be given to employers in the circumstances is to consider carefully the kinds of gifts which are given and to be mindful of the dollar amount limits imposed on non-cash gifts and employer-paid social gatherings. After all, no matter how much a gift from one’s employer is appreciated, or how enjoyable an employer-sponsored social event may be, neither is likely to engender much goodwill if it comes with an unexpected tax bill to the employee.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Everyone in Canada who earns a salary or wages is familiar with the deduction taken from each paycheque for contributions to the Canada Pension Plan (CPP). The CPP is one of the two major government-sponsored retirement income programs in Canada – the other being the Old Age Security program.
Everyone in Canada who earns a salary or wages is familiar with the deduction taken from each paycheque for contributions to the Canada Pension Plan (CPP). The CPP is one of the two major government-sponsored retirement income programs in Canada – the other being the Old Age Security program.
While the Old Age Security program is financed out of general federal government revenues, the CPP is self-funded by means of contributions made by employees, together with matching contributions made by their employers. (Self-employed individuals pay both the employee and employer portions of CPP contributions).
Several years ago, it was determined that changes were needed to the CPP, to ensure that CPP retirement benefits replaced a greater percentage of working income than was then the case. Those changes to the CPP began in 2019, when the required annual contribution to the CPP began to increase. It was increased each year thereafter, and now stands at 5.95% of annual earnings.
The basic structure of the CPP provides that everyone who is between 18 and 69 years of age and earns more than $3,500 per year must make CPP contributions equal to 5.95% of their income between $3,500 and a specified income ceiling. That income ceiling is known as the Year’s Maximum Pensionable Earnings (YMPE) and is set at $68,500 for 2024.
Beginning in 2024, however, the CPP will change from a single-tier to a two-tier contribution structure, with higher-income individuals required to make an additional CPP contribution. Specifically, individuals who have annual income of less than the 2024 YMPE of $68,500 will continue to make Tier 1 CPP contributions of 5.95% of earnings between $3,500 and $68,500. However, those whose earnings exceed the $68,500 income ceiling must pay 4% of those additional earnings (Tier 2 contributions) up to a second earnings ceiling. That second earnings ceiling – to be called the Year’s Additional Maximum Pensionable Earnings, or YAMPE – is set at $73,200 for 2024.
The effect of the upcoming changes is that individuals who will have income of more than $68,500 during 2024 must pay both the 5.95% contribution on earnings between $3,500 and $68,500 (Tier 1 contributions) and 4% of earnings between $68,500 and $73,200 (Tier 2 contributions).
There are no tax or financial planning steps to be taken in response to the upcoming changes – having CPP contributions deducted from one’s income and remitted to the federal government by one’s employer is mandatory, and there is no ability to “opt out” of making either Tier 1 or Tier 2 contributions.
Individuals who earn less than $68,500 during 2024 will see no change to the CPP contributions deducted from their paycheques, but those earning more than that amount will see increased deductions made for CPP beginning January 1, 2024. It should be noted as well that 2024 is something of a phase-in year for Tier 2 contributions. Those contribution amounts will increase in future years, as the upper income limit (or YAMPE) for such Tier 2 contributions, which is set at $73,200 for 2024, will increase significantly in 2025 and later years.
No one likes to see additional deductions being taken from their paycheque but those who are affected by the increased contribution requirements at least have the satisfaction of knowing that their higher contributions will eventually be reflected in an increase in CPP retirement benefits to which they will be entitled.
Detailed information on the upcoming changes to the CPP (including changes planned for years after 2024) can be found on the federal government website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-enhancement.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.
They can be accessed below.
Corporate:
Personal:
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
When the pandemic struck in March of 2020 and public health lockdowns were imposed, virtually all Canadian employees were required to work from home, most for the first time.
When the pandemic struck in March of 2020 and public health lockdowns were imposed, virtually all Canadian employees were required to work from home, most for the first time.
In the nearly four years since then, the work landscape has shifted, as many employees continue to work entirely from home, some have returned to the office full-time, and many, perhaps most, now utilize some kind of hybrid arrangement, dividing their work week between their employer’s work site and a home office.
As the necessity and availability of work-from-home arrangements changed (and changed again) over the past four years, the tax rules governing deductions which could be claimed for home office expenses changed (and changed again) to meet those realities.
Employees who work from home have always been able to claim a tax deduction for costs related to a home office. Under the tax rules in place prior to 2020, a claim for a deduction for home office expenses was available only where employees met a number of criteria and could provide the tax authorities with an itemized accounting of eligible home office expenses incurred, as well as attestation from their employer of the terms of the work-from-home arrangement – known as the “detailed” method. However, when work-from-home arrangements became essentially mandatory in 2020, the federal government greatly simplified the rules governing those claims, to provide for a temporary flat-rate method which eliminated the requirement for documentation of home office costs. That flat-rate method was available (with some variations) during 2020, 2021 and 2022, but cannot be used for home office expenses claims for 2023.
For 2023, the “detailed method” for claiming home office expenses will be the only method under which such costs may be deducted for tax purposes. What follows is a summary of the current rules outlined on the Canada Revenue Agency (CRA) website with respect to claims for home office expense deductions using the detailed method which will apply to such claims during 2023.
In order to claim a deduction for costs related to a work from home space using the detailed method, an employee must meet at least one of the following conditions.
- The employee worked from home during the year as a consequence of the pandemic (including employees who were given a choice and elected to work from home); or
- The employee was required by their employer to work from home during the year (this can be just a verbal or written agreement between employer and employee).
In addition, at least one of the following criteria must also be satisfied in order to claim work from home costs under the detailed method.
- The work at home space is where the individual mainly (more than 50% of the time) did their work for a period of at least four consecutive weeks during the year; or
- The individual uses the workspace only to earn their employment income. They must also use it on a regular and continuous basis for meeting clients, customers, or other people in the course of their employment duties.
Once these threshold criteria are met, a broad range of costs become deductible by the employee. Specifically, a salaried employee can claim and deduct the part of specified costs that relate to their work from home space, such as rent, utilities costs like electricity, heating, water (or the portion of a condo fee attributable to such utilities costs), home maintenance and minor repair costs, and internet access (but not internet connection) fees.
Once total expenses are tallied, the taxpayer must determine the percentage of those expenses which can be deducted as home office expenses, and the CRA provides detailed information on its website of how such determination is made. Generally, the employee determines that percentage based on the square footage of the workspace as a percentage of the overall square footage of the home. Where the workspace is not a separate room but is a shared space like a dining room, the employee must also calculate the number of hours for which that space is dedicated to work from home activities. Detailed information on how to make those calculations (including an online calculator) can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses/work-space-use.html. In all cases, the CRA can ask the taxpayer to provide documentation and support for claims made using the detailed method.
There is one further requirement for employees who seek to deduct costs incurred in relation to a home office using the detailed method. Each such employee must obtain either a T2200S Declaration of Conditions of Employment for Working at Home Due to COVID-19 - Canada.ca or T2200 Declaration of Conditions of Employment - Canada.ca. On those forms, the employer must certify the work from home arrangement and confirm that the employee is required to pay their own home office expenses and is not being reimbursed for any such expenses incurred. Where there is any kind of reimbursement provided, the employer must specify the type of expense reimbursed, and the amount of reimbursement. And, of course, the employee cannot claim a deduction for any expenses for which reimbursement was received.
For the many taxpayers who were able to avail themselves of the simplified method for claiming a deduction for home office expenses in 2020, 2021, or 2022, the upcoming filing season for returns for 2023 may be the first time they encounter the rules and requirements which govern claims for home office expenses using the traditional detailed method. It would, therefore, be advisable to do some upfront planning to determine whether a deduction claim can be made for 2023 and to ensure that any record keeping needed to support that deduction is done before tax filing season arrives a few months from now.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
The day-to-day financial impact of increases in interest rates over the past 18 months, together with higher costs for nearly all goods and services, means that for most Canadians maximizing take-home income isn’t just desirable, it’s a necessity. And the best way to make sure that take-home pay is maximized is to ensure that deductions taken from that paycheque – especially deductions for income tax – are no greater than required.
The day-to-day financial impact of increases in interest rates over the past 18 months, together with higher costs for nearly all goods and services, means that for most Canadians maximizing take-home income isn’t just desirable, it’s a necessity. And the best way to make sure that take-home pay is maximized is to ensure that deductions taken from that paycheque – especially deductions for income tax – are no greater than required.
For most Canadians, (certainly for the vast majority who earn their income from employment), income tax, along with other statutory deductions like Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, is paid periodically throughout the year by means of deductions taken from each paycheque received, with those deductions then remitted to the Canada Revenue Agency (CRA) on the taxpayer’s behalf by their employer. Eventually, the taxpayer files a tax return for the year. Where things work as intended, the total amount of income tax deducted from the taxpayer’s paycheques throughout the year is very close to the amount of tax they owe for that tax year. Where the amounts withheld for income tax are greater than the taxpayer’s total tax payable for the year, they receive a tax refund. Most taxpayers like receiving such a tax refund, but the fact is that receiving a refund means that the taxpayer has overpaid taxes throughout the year, and essentially provided the tax authorities with an interest-free loan of monies which could have been paid to the taxpayer by their employer throughout the year.
The amount of tax deducted by employers and remitted to the federal government on the employee’s behalf isn’t arbitrary – rather, it’s based on information provided to that employer by the employee. That information is provided on a TD1 form, which is completed and signed by each employee, sometimes at the start of each year, but certainly at the time employment commences. Each employee must, in fact, complete two TD1 forms – one for federal tax purposes and the other for provincial tax imposed by the province in which the taxpayer lives. Federal and provincial TD1 forms for 2024 (which have not yet been released by the CRA but, once published, will be available on the Agency’s website at https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later.html) list the most common statutory credits claimed by taxpayers, including the basic personal credit, the spousal credit amount, and the age amount. Adding together all amounts claimed on each TD1 form gives the Total Claim Amounts (one federal, one provincial) which the employer then uses to determine, based on tables issued by the CRA, the amount of income tax which should be deducted (or withheld) from each of the employee’s paycheques and remitted on their behalf to the federal government.
While the TD1 completed by the employee at the time their employment commenced will have accurately reflected the credits claimable by the employee at that time, everyone’s life circumstances change. Where a baby is born or a child starts post-secondary education, there is a separation or a divorce, a taxpayer turns 65 years of age, or an elderly parent comes to live with their children, the affected taxpayer(s) will often become eligible to claim tax credits not previously available. And, since the employer can only calculate source deductions based on information provided to it by the employee, those new credit claims won’t be reflected in the amounts deducted at source from the employee’s paycheque.
Consequently, it’s a good idea for all employees to review the TD1 form prior to the start of each taxation year and to make any changes needed to ensure that a claim is made for any and all credit amounts currently available to them. Doing so will ensure that the correct amount of tax is deducted at source throughout the year.
As well, it’s often the case that a taxpayer will have available deductions for expenditures like Registered Retirement Savings Plan or First-Time Homeowner Savings Plan contributions, deductible support payments, or child care expenses, none of which can be recorded on the TD1 but all of which reduce the taxpayer’s tax owing for the year. While such claims make things a little more complicated, it’s still possible to have source deductions adjusted to accurately reflect those claims and the employee’s resulting reduced tax liability for 2024. The way to do so is to file Form T1213 – Request to Reduce Tax Deductions at Source (available on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1213.html) with the CRA. Once that form is filed with the CRA, the Agency will, after verifying that the claims made are accurate, provide the employer with a Letter of Authority authorizing that employer to reduce the amount of tax being withheld from the employee’s paycheque – and thereby increasing the employee’s take-home income.
Of course, as with all things bureaucratic